With LendPro the retailer chooses the setting and LendPro configures it for each location: by default one application reaches several lenders at once, or a traditional waterfall runs prime, then near prime, then No Credit Needed. This guide covers both settings, setup, lender fit by ticket size and the numbers to watch.
Key takeaways
- Waterfall financing is a sequential application flow through configured lenders, so a decline from one lender can pass the application to another applicable lender without a new form.
- LendPro offers a default setting where several lenders review at once and a traditional waterfall setting that runs prime, then near prime, then No Credit Needed.
- The retailer chooses its lenders and setting, LendPro configures the flow for each location, and changes are requested through LendPro.
- Retailers should compare approved amounts with their ticket sizes using LendPro's Approval Rates, Daily Applications and Sales Performance reports.
What is waterfall financing in retail?
In retail, a financing waterfall is a sequential application flow through configured lenders: the order in which lenders see a shopper's application. The shopper fills out one form. In the traditional setting, the platform sends it to the prime lender first. If that lender declines, the application moves to secondary (near prime) lenders, then to No Credit Needed providers, until a lender returns an offer or the list runs out. The associate never logs into a second portal.
LendPro also offers a default multi-lender setting. One application reaches several lenders in the retailer's lineup at once, and pre-qualified offers from more than one provider can show side by side. Where the provider supports pre-qualification, it uses a soft pull and won't affect credit scores. A lender may run a hard inquiry if the shopper accepts an offer. The retailer chooses its lenders and setting, and LendPro configures the flow for each location. Changes are requested through LendPro and can be limited by lender agreements and program requirements.
Related terms: second-look financing is the near prime tier, a retailer-controlled waterfall is one where the retailer, not a lender, decides the lineup and order, configured by LendPro for each location, and a multi-lender platform runs it. LendPro is not a lender. Lenders make all credit decisions and set all terms.
How a financing waterfall works, step by step
- The shopper starts one application. From a product page or the cart, an in-store tablet or kiosk, a QR code, a text link or a hosted application launched from the POS. The shopper picks a path: See If You Pre-Qualify, No Credit Needed, or Lookup Application to return to an existing application.
- The merchant's setting decides who reviews it. In the default multi-lender setting, the application reaches several lenders in the lineup at once. In the traditional waterfall setting, the prime lender reviews first.
- A decline routes the application on. In the traditional setting, a prime decline brings secondary (near prime) offers next, then No Credit Needed. In either setting, a declined application is routed to another applicable lender, if one is available.
- The shopper sees pre-qualified offers. Each shows the provider's name and a pre-qualified amount, subject to the lender's final approval. In the default setting, offers from more than one provider can show side by side. Not all providers support pre-qualification.
- No Credit Needed, when the store offers it. A shopper can choose No Credit Needed at the start. That path skips the primary lenders and goes straight to no-credit-needed providers, where several offers may show side by side. The provider's full application may include a check with the credit bureaus and/or alternative credit sources. Some of these providers offer lease-to-own. Lease-to-own is a rental-purchase agreement, not a loan. Total cost is higher than the cash price.
- The shopper completes the provider's application. She selects an offer, sees the provider's confirmation with the available limit, completes that provider's full application (employment, debit card and/or bank details may be required), agrees to the provider's terms and submits.
- The merchant finalizes the sale in LendPro. The associate creates the invoice, the shopper e-signs in store or by text or email link, and the merchant processes settlement on delivery. Results can sync back to the store system through POS Sync where integrated.
- A higher amount means a new application. The waterfall does not keep running after an approval. A shopper who wants more starts a new application.
What are the tiers in a retail waterfall?
Most retail waterfalls have three tiers. Within each tier you can place more than one lender, and you can mix product types: bank cards, installment loans, revolving lines and lease-to-own.
| Tier | Who it serves | Types of programs |
|---|---|---|
| Prime | Shoppers with strong, established credit | Bank and card programs: bank cards, promotional plans, prime installment loans |
| Secondary (near prime) | Fair credit, thinner files, recent late payments | Installment lenders: credit lines and installment loans with fair-credit pricing |
| Subprime and No Credit Needed | Limited, damaged or no credit history | Installment and lease-to-own providers |
Each lender sets its own criteria. Availability varies by retailer, state and purchase. Ask for the current lender lineup for your state during a demo. Lease-to-own is a rental-purchase agreement, not a loan. Total cost is higher than the cash price.
In the traditional setting, keep prime first so qualified shoppers are not pushed into a higher-cost product. Near prime terms cost the shopper more than prime, and merchant fees can differ. Lenders set promotional terms and required disclosures.
We will walk through your lenders, tiers and entry points in a live demo.
What happens to one $4,000 sectional in each setting?
A shopper wants a $4,000 sectional. She taps See If You Pre-Qualify on a store tablet. Here is what she sees in three situations.
| Step | (a) Traditional waterfall setting | (b) Default multi-lender setting | (c) Short prime approval |
|---|---|---|---|
| Who reviews first | The prime lender | Several lenders in the store's lineup at once | The prime lender |
| What comes back | Prime declines. A secondary (near prime) offer for $4,000 shows next. | A prime offer for $2,500 and a near prime offer for $4,000, side by side | Prime returns $1,800 |
| If that falls short | No Credit Needed offers show next | She can still choose No Credit Needed | She can choose No Credit Needed, or start a new application for a higher amount |
| What she does | Selects the near prime offer and completes that provider's application | Compares and picks one provider to continue with | Picks a path; the waterfall does not keep running on its own |
| What the store does | Finalizes the sale in LendPro: invoice, e-sign, settlement on delivery | Same: invoice, e-sign, settlement on delivery | Same, once she completes a provider application |
Illustrative example. Amounts are hypothetical. Every pre-qualified amount is subject to the lender's final approval, and every approval, amount and term is set by the lender. Lease-to-own is a rental-purchase agreement, not a loan. Total cost is higher than the cash price.
The lesson is in column (c). A prime approval that falls short of the ticket is not a win by itself. The shopper needs a clear next step. Reviewing your lender mix for your ticket sizes with LendPro helps large tickets reach lenders whose limits fit them. An approval only matters if it gives the customer enough purchasing power to move forward.
How to set up a waterfall
- Pull your baseline. From your current lender reports, note applications per month, approval rate, average approved amount and average financed ticket.
- Choose your setting. Use the default multi-lender setting to show offers from several lenders side by side, or the traditional waterfall setting to run prime, then near prime, then No Credit Needed in order.
- Place your prime lender. Many retailers keep their current prime lender first in the traditional setting, so best-credit customers keep the best terms.
- Add at least one near prime lender. Pick for fit with your ticket range and states. See how to choose second-look lenders.
- Add No Credit Needed providers. One or two subprime installment or lease-to-own programs close the gap for thin-file shoppers. Train staff on the disclosure: lease-to-own is a rental-purchase agreement, not a loan, and costs more than the cash price.
- Review lender fit for your ticket sizes. Check each lender's minimum and maximum amounts against the tickets you sell, and review the lineup with LendPro (see the next section).
- Place the entry points. Product pages and cart online; tablets, kiosks and QR codes on the floor; text links for phone leads; the hosted application from the POS.
- Train every associate on the three paths. See If You Pre-Qualify, No Credit Needed and Lookup Application, plus how to finalize: invoice, e-sign and settlement on delivery. Use the counter scripts here.
- Go live, then review weekly for 30 days. Read the Daily Applications, Sales Performance and Approval Rates reports, and turn on Employee Tracking to see results by associate. Request setting or order changes through LendPro.
LendPro's go-live SLA is 10 business days. Timing depends on lender activation and integration scope, and custom integrations take longer. LendPro confirms the start date and prerequisites during onboarding.
How do ticket sizes affect your lender mix?
Lenders have minimum and maximum amounts that fit some tickets better than others. LendPro uses a financing flow configured for each location based on the lenders assigned to that location and the requirements of those programs. Contact LendPro to review configuration changes. Use the questions below to review your lineup with LendPro.
| Ticket band | What to review with LendPro | Why |
|---|---|---|
| Under $500 | Whether lenders in your lineup have minimum amounts above your small tickets | Some programs have minimum amounts and can't fund small tickets |
| $500 to $3,000 | Whether your standard lineup covers this range | Covers many furniture, mattress, appliance and tire tickets |
| $3,000 to $10,000 | Whether the prime and near prime lenders in your lineup approve amounts this large | Approval amount, not approval alone, is the constraint at this size |
| Over $10,000 | Whether your lineup includes prime installment programs with long terms | Long terms keep the monthly payment affordable |
Illustrative example. Bands are examples, not recommendations for any specific store. Each lender sets its own minimums, maximums and criteria.
Use the Approval Rates report to compare lenders side by side before you request a change.
Bring your current lenders. We will show how LendPro would be configured for your stores.
How do in-store and online waterfalls differ?
Configure financing for each sales channel. Online and in-store lender availability, application requirements, and results may differ. LendPro works with the retailer to establish the appropriate configuration for each channel. The table shows who drives the application and how the result reaches the sale in each channel.
| In store | Online | |
|---|---|---|
| Who starts it | The associate hands over a tablet, points to a QR code or kiosk, or sends a text link | The shopper, from a product page or the cart |
| Key setting | Employee Tracking on, so associate-level results show in reports | Placement and message on product pages |
| How results reach the sale | The associate finalizes in LendPro (invoice, e-sign, settlement on delivery); results can sync back to the store system through POS Sync where integrated | Depends on the provider and setup: some shoppers complete the purchase with the provider, others return to the retailer's checkout |
Retailers that sell both ways should review each channel's configuration with LendPro. See kiosks and devices for floor hardware.
Which numbers show whether your waterfall is working?
LendPro's merchant portal includes a Dashboard, Search, Orders and three reports: Daily Applications (by location, associate and initial lender), Sales Performance (by store, associate and customer) and Approval Rates (lenders side by side, with pre-qualification and full-application approval rates, average approval and totals by location). Each exports to CSV. Associate-level results show only when Employee Tracking is turned on.
The numbers below are ones a retailer can calculate from those exports, combined with its own traffic and POS data. They are your analysis, not report names in LendPro.
| Number you can calculate | How to calculate it | What it tells you |
|---|---|---|
| Application rate | Applications from Daily Applications divided by your own store traffic or web sessions | Whether shoppers and associates use financing at all |
| Pre-qualification to full-application conversion | Compare pre-qualification and full-application approval rates in Approval Rates | Where shoppers drop between an offer and a finished application |
| Sales after the initial lender | From the exports, count funded sales where the funding lender differs from the initial lender | What the lenders behind your first position add |
| Ticket coverage | Compare average approval by lender in Approval Rates with your average ticket from the POS | Whether approvals are big enough to close the sale you were making |
| Funded share by lender | Group the Sales Performance export by lender | Whether shoppers who qualify for prime land in prime |
What mistakes do retailers make with waterfall financing?
- Putting the most expensive option first. In the traditional setting, if lease-to-own sits above prime, shoppers who qualify for bank terms pay more and complain. Keep cost order: prime, near prime, then No Credit Needed. Lease-to-own is a rental-purchase agreement, not a loan. Total cost is higher than the cash price.
- Counting approvals, not coverage. An approval for half the ticket often ends in a downsell or a walk. Compare approved amounts to ticket size.
- Promising the waterfall keeps going. It does not run on after an approval. A shopper who wants more starts a new application.
- Calling a pre-qualified amount an approval. Say "pre-qualified, subject to the lender's final approval." Pre-qualification is not a guarantee of approval.
- Set and forget. Lenders change criteria. Review the Approval Rates report monthly and ask LendPro to review the order when the numbers move.
- Too many lenders in one tier. More is not always better. A common starting point is a short list per tier that fits your tickets, adding lenders when your data supports it.
How does LendPro run a retailer's waterfall?
LendPro is not a lender; lenders make all credit decisions and set all terms. You choose the setting, multi-lender or traditional waterfall, and your lenders and order from 18+ lenders and 25+ lending programs, and LendPro configures the flow for each location. Changes are requested through LendPro and can be limited by lender agreements and program requirements. STORIS retailers run it inside the POS through LendPro 2.0 for STORIS, and auto shops reach it through 1stMILE. LendPro holds a SOC 2 report (security). LendPro's go-live SLA is 10 business days.
Book a live demo to see a waterfall built for your ticket range.
Frequently asked questions
What is a financing waterfall?
A financing waterfall is the sequence of lenders that review one shopper application. If one lender declines, the application is routed to another applicable lender, if one is available, without a new application.
Does waterfall financing hurt a shopper's credit score?
Where the provider supports pre-qualification, it uses a soft pull and won't affect credit scores. A lender may run a hard inquiry if the shopper accepts an offer. Not every provider supports pre-qualification, so some offers come from the provider's own application.
Who decides the order of lenders?
The retailer, not a lender. With LendPro, the retailer chooses the default multi-lender setting or the traditional waterfall setting and its lender order, and LendPro configures the flow for each location. Changes are requested through LendPro and can be limited by lender agreements and program requirements.
Can I keep my current bank financing program?
Yes. Many retailers keep their current prime lender first and add near prime and No Credit Needed providers behind it.
Does the waterfall keep running after an approval?
No. Once a lender approves, the waterfall stops. A shopper who wants a higher amount starts a new application.
What does No Credit Needed mean in a waterfall?
It is a path the shopper can choose at the start. It skips the primary lenders and goes straight to no-credit-needed providers, whose full application may include a check with the credit bureaus and/or alternative credit sources.
Is lease-to-own part of a financing waterfall?
It can be, usually in the No Credit Needed tier. Lease-to-own is a rental-purchase agreement, not a loan. Total cost is higher than the cash price.
How long does a waterfall decision take?
Each lender responds on its own timeline, and shoppers see results on screen once lenders respond. Because the shopper fills out one application, no time is lost re-keying it into a second lender portal.