GreenSky Credit forms out of failure of home renovation business mode

Carl Icahn, one of the greatest investors in history, said that the most money is made doing the simplest things. It’s almost hard to believe that in today’s highly technological society, where every possible edge seems to be instantly spotted by the tech overlords and exploited to the maximum, any serious market inefficiency could exist in plain sight, right in front of the eyes of some of the most powerful retail firms in the country.

But that is exactly the situation that led to the formation of GreenSky Credit. Founder David Zalik, a former child prodigy and precocious entrepreneur, who had made his first $5 million by the age of 22, spotted an almost inconceivable flaw in the way that many home remodeling companies were doing business.

Zalik saw that a large number of customers were severely underestimating the true final costs of home renovations. When they got the true estimate, they either experienced sticker shock severe enough to drive them off, or they simply didn’t have the liquid funds on hand to complete the projects.

Not just washers and dryers

In most retail situations, when a creditworthy customer ends up not having enough cash on hand to complete a purchase, there are a plethora of financing options that can save the sale. These include in-house financing, manufacturer instalment plans, and putting the item on a credit card. However, when the items being sold are complex home renovation projects, which often entail a combination of both goods and services, these options were not available for the full cost of the project.

In fact, for projects in the five- and six-figure range, virtually no consumers had the necessary credit limit to put those transactions on their credit cards. And instalment financing for these projects simply didn’t exist.

This is the market niche that GreenSky Credit has filled. GreenSky Credit offers point-of-sale financing that is truly instant in nature. GreenSky customers are either approved or denied on the spot, for the full amount of the loan. This means that GreenSky borrowers can be approved for loans as high as the $300,000s on the spot, allowing projects to move forward immediately that would have likely been permanently shelved.

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