While David Zalik was working as the CEO of e-consulting firm OutWeb, he began to notice a serious problem in the way some of his home-remodeling company clients were handling certain aspects of their business. Specifically, Zalik saw that there were a large number of high-end homeowners who were coming in to stores like Lowe’s and Home Depot and looking to carry out big-ticket renovation projects. However, the majority of these homeowners had no experience in contracting. When they inevitably ended up underestimating the true cost of their projects by four- or five-figure amounts, the deals would often fall through. This wasn’t because of cost — most of these renovation projects were actually value-additive because they boosted the home’s price by more than they actually cost. Instead, many of these homeowners were unable to complete the renovation for simple lack of liquid funds to do so.
Zalik knew that insufficient cash on hand was a very common problem in real estate even for large commercial developers. However, where large real estate developers had access to sophisticated bridge-financing facilities, normal homeowners didn’t have anything similar to help them carry out their home renovation projects. This is where the idea of GreenSky was born.
GreenSky offers an enticing solution
Zalik created GreenSky as a way for average homeowners who were looking to carry out a big-ticket remodeling project to have access to the same kind of instant cash infusions that the big dogs in real estate development enjoyed. GreenSky matches up homeowners at the point of sale with some of the largest lenders in the country, offering them instant loan terms that are often good enough that few can turn them down. A typical GreenSky loan involves no interest or payments needing to be made in the first year of the loan. Because the average GreenSky customer has a FICO score above 760, the vast majority of its borrowers pay the loan back, in full, within the first year.
At the same time, GreenSky partner banks get high-performing loans on their books, and contractors and home improvement businesses get billions in additional business each year.