The Future of Financing: Universal Credit Application - PODCAST TRANSCRIPT

Editor's note: The following is the transcript of a live interview with Craig Jones of Leap. You can read the interview below or listen to the podcast

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Karen Edwards: Welcome to another episode of Roofing Road Trips from RoofersCoffeeShop. I'm your host, Karen Edwards and today we are going to be talking with Craig Jones from Leap about their newest innovative feature, which is the universal credit application. I'm excited to learn more about this. Craig, welcome. It's nice to have you here.

Craig Jones: Hey, Karen, thanks and thanks for inviting me on.

Karen Edwards: Well, I would love for you to just introduce yourself to our listeners and tell us a little bit about you and what you do there at Leap.

Craig Jones: Sure. Well, first of all, I'm really excited to discuss Leap and all of our products and features to build and drive efficiencies that help our roofing and home improvement contractors. So we're excited about that. I joined the Leap's executive team a few months back. First of all, I'm super excited to be part of the Leap family. It's just a great company with great products and services, but even greater people. And at the crux of what we do, it's all about the people. So really excited about that. It's also super aligned with our customers and what our customers need. But my role at Leap is specifically around bringing FinTech, both lending and payment enablement and embedded finance, to our customers to make them more prosperous.

Karen Edwards: Okay. Well, I am going to, even before we go into universal credit application, FinTech is kind of a newish term I think, but you mentioned it's just about invoicing and payment? It's that simple?

Craig Jones: Well, FinTech as it relates, I wouldn't say it's so newish, but it might be newish into the roofing and the home improvement space. The way that we've handled financial services and handled that and pushed it out to contractors and dealers has been a little antiquated. So I think bringing a little bit of financial technology to enable our customers to be more effective is super important. But FinTech in its own right has been around for a long time. It's a term that's pretty used loosely, but I would say in our application right now, the way that we have it on the roadmap for the immediate future is to provide lending enablements so our dealers can provide loans to consumers to make sure that they have the funding necessary to take care of the projects that they want to have done at their homes. And in addition to that, payments. So making sure that the payment capabilities of our contractors have the ability to take a payment in-house or attach easy payment capabilities to invoices so they get paid in a timely fashion. And more importantly, keep that cash flow flowing.

Karen Edwards: Okay. I know that for Leap innovation is really important, and it seems like each year at the Roofing Expo there's something new coming out and I just wanted you to talk a little bit about why that's important to Leap and what does that innovation look like? How are you deciding what to roll out next?

Craig Jones: That's a great question, actually. I personally think that innovation should be the forefront of every company. I've learned really early in my careers and throughout my career that complacency can be devastating, so that innovation is what drives advancement and results. And I think more importantly, you couple that with kind of a healthy risk tolerance and that helps you kind of push the boundaries of what is possible and push what is possible even further. And I think that's what we're trying to do at Leap. I think at Leap, innovation is at the core of everything that we do, we believe that I'd say by constantly pushing the boundaries of technology, introducing technology, we can provide our contractors with the tools they need to succeed. Our goal is really to streamline the entire home improvement process from sales to financing to project management.

Craig Jones: I think from how we decide what's next, we listen to our customers. I mean, our customers, we're not building this for Leap, we're building this for our customers. We don't build it for one customer, we build it for all of our customers, really trying to solve problems for our industry and making sure that we listen to what our customers' needs are and what their challenges are. We're in a little bit of a unique experience in the fact that we have thousands of contractors that utilize our platform and tens of thousands of users every day. What that enables us to do is see the behaviors and see the friction and see where they're successful and where they fail, and we can look at that data in aggregate and start to bring insights to the industry to say, "Hey, this is what we're seeing."

Craig Jones: So it's not like we're seeing the industry from the perspective of one roofer or one bath remodeler. We're seeing it across all of our clients, which gives us a little bit more clarity in where we think we should go. But more importantly, we have a pretty good philosophy about interacting with our customers and ensuring that we have dedicated account executives and customer success managers that are speaking to our customers on a regular basis. And what that allows us to do is understand the frustrations, what we're doing really well and unfortunately we hear a lot what we're not doing so well all the time, which is good because it helps drive us and motivate us and make sure we're pushing towards solving the problems.

Karen Edwards: Yeah, that's important. Data is so powerful. If you don't understand how users are using it and what their challenges are, then you can't address and make things easier for them. But I want to even back up further because I just assumed everybody knows what Leap is, right?

Craig Jones: Of course. Yeah.

Karen Edwards: Because I feel that way, but there may be somebody listening that really doesn't know what Leap is. So can you please give me that quick elevator explanation of what Leap does for a contractor and home improvement contractor?

Craig Jones: Yeah. So Leap has a couple software products, software as a service. So it is cloud hosted, it's enabled and it's an enablement platform for our home improvement contractors and roofers. So we have a Leap SalesPro product. That Leap SalesPro product is really geared towards the front-end sales. So taking customers that have scheduled appointments with our contractors all the way through the deal process and closing contracts and contracted projects. So it allows them to go through the process of building an estimate and proposal. And that SalesPro product has a ton of integrated features, so anything from their pricing guide. So if they have pricing and material guides that they have in there, it's all there.

Craig Jones: If they have needs to do measurement tools, we have partnerships with other measurement companies that allow you, like, say example, take an image of the roof and understand how many squares of shingles there are, what the pitch of the roof is, how complex the roof is, all those individual features. Material handling, we have integrations with different material shops that allow you to integrate and order the materials themselves. So a lot of great end-to-end features to come into like, let's say Karen, I'm sitting in your house. I'm able to provide you with an instant proposal and a quote, inclusive of being able to get you the financing needed to be able to do that job, which is critical because I mean, a lot of people need roofs and a lot of people can get those roofs done. There's a lot of roofers out there. It's a competitive market space, but being able to make sure that you can enable the customer to find the financing they need and everybody can write a check. Very few people can write a check as a matter of fact for $20,000 to a roof, for $15,000 to a roof.

Craig Jones: So I think it's super important that we're getting them the financing they need, but that's the Leap SalesPro product. We have another product called Leap CRM, so they can be used in conjunction. So it's truly a customer relationship management product and/or this Leap CRM product has similar capabilities on the front-end sales, but it also takes you through the project. So it's intended to be also a project delivery mechanism as well where you can give status updates and you can generate multiple invoices and communicate to the customer through the app.

Karen Edwards: Nice. So it's, yeah, from start to the very end and completion-

Craig Jones: That's the idea.

Karen Edwards: ... it's the platform idea. Yeah. So let's talk about the universal credit application because like you said, that's a big purchase. It's a big investment, and it's so important, especially if we're talking about a roof that's protecting your home and everything inside of it, but not everybody can write a check for $15,000 or $20,000. So how does the universal credit application work, and what options does it... I mean, I can see it being a great tool for the contractor because they can offer these options to the homeowner, but what does that process look like?

Craig Jones: Yeah, I think a couple of things. Leap's innovation offers a lot of different key benefits as contractors. First and foremost, it helps them close more deals. It provides a seamless and efficient, what I'll call as a unified workflow, that helps them sell more projects and it has that consistency. So again, it goes back to having all that information in the product guide and all the data in there. It provides consistent outcomes. So whether you have five people out in the field selling or you have 500 people out in the field selling, the result is always consistent, which is why I think our customers love it. It certainly allows us to improve the customer relationship. It offers a lot of transparency and convenience, and then it also speeds up the time to sell. So all that's really super important.

Craig Jones: And then you layer in what I'll call a critical feature, which is this universal credit app. So what the universal credit app does, it provides access to multiple lenders, so we have a lending marketplace where we partner with multiple lenders and allows you to have one single application. So it gives contractors more options to access multiple lenders for their customers, so you can meet the unique needs of those customers. And those needs could be diverse. It could be customers that have different, they want a promotional credit line, so it's 0% for 12 months. It could be that they want a lower APR or low payment. It could also mean that they have good credit or poor credit. So we try to make sure that we have a lending marketplace that satisfies all of those aspects. But the best thing about the Universal credit app is you have one credit app that you complete that can go to any of those lenders, and it satisfies those lenders, so it's speed and efficiency.

Craig Jones: So typically what would happen is if you're not using lending through one of the Leap platforms, Karen, I'd be sitting across the table, if you pitch in your roof, I'd have to go to another portal, so leave the Leap software where your proposal sits, go to another portal and fill out a lender's application. And if I wanted you to have two or three lender options, I'd have to go to two or three portals, complete two or three full-credit apps, which are pretty lengthy. Admittedly, they're pretty lengthy. It is a financial transaction, it's an unsecured loans, so they do need a lot of data, but you'd have to go out and do that three different times to get the same results of filling out one application, which can be pre-populated from some of the data already in the app in our SaaS app. That can be pre-populated, and that allows you to submit that one credit app with one click to different lenders.

Karen Edwards: From a homeowner perspective, obviously one app is way better than three, but if I'm filling out three different credit applications, is that three credit inquiries on my credit record?

Craig Jones: There's a difference in the industry between hard credit pulls and soft credit pulls.

Karen Edwards: Okay.

Craig Jones: So you'll see it on all kinds of websites, and I think inside home improvement and outside of home improvement. If it's a hard credit pull, it's considered an inquiry on your credit record. It would potentially have an adverse impact to your credit history if you're applying multiple times and the credit bureaus look at hard inquiries as someone seeking credit. If you're looking at a soft pull, which most of the majority of our lenders use is a soft pull, it has no adverse. It's almost like they're checking your score on your credit to give you an idea of whether you would be approved and for how much. So it's more of a soft pull. If you do elect to say that is the loan that you want, that lender will go back and pull a hard pull, so it's required to do the hard pull for their credit underwriting, but they'll kind of give you kind of a show before you buy to give you an idea of whether you are approved and also whether you qualify for the amount that you've asked.

Karen Edwards: That's nice because then you can look at all your options through the multiple lenders and choose the one that is the best fit for your personal financial situation. I like that.

Craig Jones: You got it.

Karen Edwards: My next question is, is this just automatically built into the Leap platform? If I'm a contractor using the Leap SalesPro and the other pieces, is it there or do I need to sign up for it?

Craig Jones: So all of our clients have access to the credit capabilities within Leap SalesPro. What it usually requires is you still as a dealer or a contractor, you still have to be underwritten by the bank that is the lender or the financial service company that's the lender. So there is a prerequisite, you have to get approved by the lenders. Once you've established a relationship with that lender and they know that you have a lender ID, they issue a lender ID, that basically identifies that XYZ Windows has this ID and they're approved with these five lenders. Once that's embedded into our system, we would also either we would take the loan plans that you've elected because the loan plans are diverse, very diverse as well and there's numerous loan plans. So the benefit of that is you can turn on certain plans in our system that you want to offer to consumers, so you can say what's the most favorable.

Craig Jones: Remember, behind some of these loans are costs for these dealers. So if I'm giving you 0% for 12 months, it's costing that dealer some money to give you that loan. Nobody's giving money for free these days.

Karen Edwards: Right.

Craig Jones: So it would equate to dealer fees or merchant discount fee that comes off the top of the loan. So you may want to regulate the loans that you want your salespeople to give. We give them that administrative power, like a finance leader to be able to make those decisions and control. Again, it goes across whether it's five people or 500 people, the whole concept of Leap is to give the consistency and the control back to the dealers to manage their business the way they see fit. But once that's turned on, we allow those, again, to put controls, they can put certain users or certain offices on the platform, enable them. If you want one office to have certain lending options and another region to have it different, you can do that. So once it's turned on, you're able to funnel credit apps in seamlessly. There's nothing that your users have to do. It's just more of an administrative aspect to registering.

Karen Edwards: So if a job is sold and the homeowner is going to finance it, and they do the universal credit application, they get approved, they get the loan for the job. Does the contractor get paid once the job's complete? Are they paid in full and then the homeowner is making those payments back to the lender, right? They're out of the picture at this point.

Craig Jones: You got it. So it's a good question and it's an important thing too to recognize, so I appreciate the question. The loans that we have are dispersed to the contractors. So there's some other platforms in the marketplace that say they do home improvement lending to contractors, but in many cases, it's really a glorified consumer loan that gets paid out to the consumer. Listen, the benefit of having some of these loans and in some cases dealers are willing to pay some points for it because it gives them the security that that money's coming to them, that they don't have to chase down Karen to go get a payment. Or Karen doesn't go on a shopping spree after she gets her money and has a roof that she can't afford still. So it happens. We know it happens. So I think the security of having the loan approved with upon completion of the job that it gets paid out.

Craig Jones: And then there's other features too. Some of the lenders will allow you to have stage funding where you're allowed to get money before the job started, so some companies will give you 20% before the job starts and then maybe 80% upon completion. So we're working to make sure that we have a good mix. So it's not necessarily just do I have the loans and the lenders that meet the credit quality of the consumer? Each individual dealer and contractor have unique circumstances. I've had customers, clients where they've come to us and said things like, "Hey, I bought $15,000 worth of cabinets and the lender, the consumer backed out of the loan and I'm stuck with $15,000 of cabinets." Do those lenders back the contractors or do they succumb to the requests of the consumer? So there's different lenders. We're trying to create a marketplace that allows us to be the match.com, if you will, of making sure we know what our dealers needs are and the consumers they deal with and matching them up with the right lenders to create the most efficiency and more importantly, the best aligned outcomes for both.

Karen Edwards: So once the universal credit application is in, they're approved, they accept the loan. Does the communication then happen not in the platform and not in the Leap platform? Is it then just kind of between the lender and the contractor?

Craig Jones: So our application in most cases has the ability to open up what we call it, an iframe. It's an individual iframe that allows you to access the lender's portal through our app, so you would be able to do that. There is some additional communication sometimes between the consumer and the lender. We do have e-Docusign, we have our own version of our electronic signature. There's things that they can do, but more importantly, they can access, in most cases, the lender's portal through ours or the consumer can go out and elect... They still have to accept the loan and sign the documentation. Once they do that, that loan is secured and we're aware of it. So in some cases, consumers and/or dealers opt to go out to deal with the bank directly. And others, they do it through our app.

Karen Edwards: Turn around approval time. When someone does submit the universal credit application, how long does it take until they get a thumbs up or thumbs down?

Craig Jones: So it varies by lender and it varies by circumstances. But if it's a clean application, meaning the data is prepared properly and it's good and we have edits and fields to make sure that we correct it before it even gets submitted, but at the end of the day, if the application's good and there's various things that go into this decision, it's not only the credit, but it's also is Karen who said Karen says she is? And that's called know your customer. So there's various things that the government and the banks from a compliance perspective have to maintain. But if the application goes through smoothly, and Karen's lived at her house for 10 years and everything matches perfectly and you have great credit, usually the decision comes back within seconds.

Craig Jones: But generally, if there's any kind of manual intervention, sometimes the lenders could take up to two minutes or if they have to punt the ball back to the consumer and say, "Hey, we might need you to give us a copy of your driver's license or a most recent pay stub," some of those things may take a little longer. But for the most part, these decisions should be made pretty quickly.

Karen Edwards: That's awesome. Yeah, because I want to know. I don't want to wait a day or whatever. So yeah, a few seconds or a few minutes even, that's not bad at all. I'm curious, how long has the universal credit application been available for contractors and what's the adoption like?

Craig Jones: So we've had a version of the universal credit app that just, I think, it had a little bit of some clogginess in the workflow. So when I came in, that's the experience that I came into when I was on their leap and it was pretty clear to me that from a user experience and interface perspective, we need to make some changes. We've made those changes. So universal credit app right now is in beta, so we have a handful of our top customers are some of our really good advocate and champion customers that love our product. Testing it right now in beta. So it's in production, it's working. We're getting great feedback. Most of the feedback is just how fast and efficient it is, and it really eliminates... The universal credit app helps streamline the tedious process of applying to multiple lenders, so it allows us to go through that process really quickly.

Craig Jones: That's the feedback that's clear and obvious. I didn't expect it not to be much different from that, but we're also getting some valuable feedback from our customers of just little changes and modifications that they'd like to see, which again, when we see that repeated across multiple clients, we know we're not catering to one client, we're building it out for multiple clients or the industry at whole. So we listen to our customers. Again, it goes back to we're building this for our customers, but the universal credit app is working great and our customers love it so far. We will be rolling it out to a general audience here. Actually, as early as next week, we're going to invite some additional customers to come back in. So we're excited about the prospects of getting it out to the marketplace.

Craig Jones: We don't want to roll it out until we feel like it's 100% exactly where it needs to be. And we do feel that way right now, but we're still going through some trials. We want to make sure that it's perfect before we release it to the masses. But we still have the original universal credit app that's in place, but this new version is a lot better.

Karen Edwards: That's really exciting because it is so convenient and I imagine that it helps close more sales at the end of the day, right?

Craig Jones: It does. The whole point is, listen, it's all about conversion. So if you're a salesperson or an owner of a company or an executive of the company and you're responsible for the performance of the company, you're making a lot of investments to get Karen interested in your company, to get an appointment set, whether it's a door knock or it's telemarketing or it's some kind of paid advertising, you're putting a pretty big investment to get Karen interested in even talking to you all. Then you get out there and you have a salesperson across the desk or across the kitchen table from Karen telling her how beautiful her new bathroom or her roof could be. To get to that point and then to potentially lose that at the credit decision is really hard. So we're trying to make sure we minimize that.

Craig Jones: In a lot of cases, traditionally the way that contractors work is they would go to one of those portals, they would have Karen apply and they would wait for the response. So it could be seconds, it could be minutes, but at the end of the day, you get response back. Well, what we've seen, again, by looking at the aggregate data of all of our customers, what we're learning is that funnel conversion and converting customers from a telemarketing call all the way down to a paid project, when they get declined at the first credit app, in a lot of cases, they don't go to the second credit app, which means they've probably told Craig to get the hell out of their house.

Karen Edwards: Yeah.

Craig Jones: Well, they're afraid that they may have too many inquiries or what, but they may not understand what a soft pull is, a hard pull. So in a lot of cases, I see customers, our clients, losing customers there. So in this case, you can really rapidly submit this credit app to multiple and as soon as you have consent from the customer to submit, you can then go ahead and submit to the 1, 2, 3 lenders if you want.

Karen Edwards: Yeah.

Craig Jones: And it eliminates that. I think it's going to eliminate some of that friction. We have a couple other things on the horizon. I mean, I'd say the universal credit app's the first step in our journey to being really a leading advocate for dealers in home improvement finance.

Karen Edwards: Yeah. So can you give a sneak peek of what's on the horizon? It's okay if you can't.

Craig Jones: I came to Leap. I have 25-plus years of experience in the home improvement or in the banking and lending ecosystems. I've worked for big banks, little banks, I've worked for startups, I've worked for unicorns like SoFi. I have built credit card portfolios, lending portfolios, investment platforms, deposits, etc. So what was interesting to me is when I came to Leap, and I'll tell you this, a little tidbit that's interesting, Karen, I actually had left the financial services in the beginning of 2023 and I wasn't sure if I wanted to go back and I actually started a home improvement business.

Karen Edwards: Oh, nice.

Craig Jones: I've built a lot of homes and did a lot of home renovations throughout my adult life. I built my first home when I was 28 years ago, and I'm still living in it today.

Karen Edwards: Oh, nice.

Craig Jones: So I have the bug for the DIY and it's turned into kind of a pseudo non-professional journey, and I decided to make it a professional journey. So it was interesting that I took another love of mine, which is the contracting and home improvement and brought that to the masses or brought that to my community. When Leap reached out to me, what was interesting is I had an opportunity to bring my two loves. My love of broadness, great financial services and really kind of pushing the edge of what we can do along with my passion for being a contractor, which is to our customers.

Craig Jones: So for me to kind of think about how I can solve for them in financial services and marry those two passions together was a unique experience for me. So I know that doesn't answer your original question, but your question was about what's on the roadmap? A lot of things, the reason I brought that up is because I have a tremendous amount of experience in the banking financial services. I've never worked in a dealer ecosystem. So when I got to this dealer ecosystem, I had to learn some of the dynamics and I'm still learning, admittedly, the dynamics between how the lenders in the space interact with the contractors/dealers, how that affects consumers. And what it kind of came clear to me is it's a little antiquated and it hasn't changed much and it's not super efficient. And the philosophy, how it happens today, I think there's room for a little bit of disruption.

Craig Jones: So what we'd like to do is really again, go back to seeing how do we serve as the advocate for our customers? And obviously, first and foremost our customers, our client and the contractor, but that extends too to the consumer because I feel responsible to make sure that our consumers also get good outcomes. So our goal is to provide our lenders with more of an aggregated approach so that we can take... Listen, there's billions and billions of dollars of home improvement contracts closed on our system every year, billions every quarter, closed every quarter. We have customers that have to go out and negotiate terms with lenders one at a time. And they're either a $2 million home improvement company or they're a $200 million home improvement company or bigger, or something in between.

Craig Jones: I think my plan is to hopefully become a little bit more of an aggregated feature for them, allow us to help build a lending ecosystem. Similar to what we have today, but much better, where we can make sure that it's a competitive marketplace for the dealers, it yields positive results for the consumers. And at the same time, we get the most efficiency and the most optimized decision. So you won't have to go apply Karen at Lender One, wait for the result, go to another portal, apply for Karen number two and then apply Karen's third or tertiary credit app in cases. Our goal is to be able to submit that to a pool of curated lenders that are there to compete and perform and provide an outcome for Karen, whether it be a tier one credit or a bottom tier credit, but we'll have that spectrum covered. So you'll get hopefully one of those customers, the customer will be approved by one of those lenders or multiple and you'll have a better choice.

Craig Jones: At the same time, Leap overall is really advancing our data capabilities and we're looking to put a lot more artificial intelligence into our workstreams. So I think when we look at being able to take Karen as an applicant and push her to the best place that gives her the best outcomes and the highest probability for approvals is our objective, but lots of things on the roadmap.

Karen Edwards: So it's a win all around. I love it, I love it. It sounds great. And I want to just thank you so much, Craig, for being here today and for sharing this cool innovation and how it can help contractors. Thank you so much.

Craig Jones: Oh, my pleasure. Appreciate you having me on.

Karen Edwards: Yeah. So if you want to learn more about Leap, they have a full directory on rooferscoffeeshop.com, so look them up out there. It'll have their contact information, their website, a little bit about them and how to get a hold of them. And I want to thank everybody out there for listening today. Be sure to follow us on social media and subscribe to Roofing Road Trips on your favorite podcast platform because we want to see you on a future episode. Thanks, Craig. Bye, everyone.

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