HVAC Business Loans for Contractors: Complete Guide

Buying a new service van. Replacing worn-out equipment. Making upgrades to your software. Investing in new technology. Whatever the reason, all of it takes money, and sometimes, more than what’s on hand.

Plenty of contractors seek HVAC business loans to finance business growth initiatives, whether it’s managing fluctuating cash flow during slow periods or making new hires to stay competitive. 

In this guide, we break down the process in detail:

• What is an HVAC business loan?

• What loan options are available? 

• What lenders typically look for.

• The types of loans and risks to avoid.

• Where to find HVAC business loans.

• Alternatives to lending and borrowing.

• Ways to boost the likelihood you’ll be approved.

Financing can get complicated, so use our guide to fund your business upgrades the smart way.

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What Are HVAC Business Loans?

HVAC business loans are financing and funding solutions designed around the realities of the HVAC industry sector. Business loans are flexible enough to cater to HVAC businesses of all sizes. 

Whether you’re just starting out or finally replacing your fleet of aging Chevy trucks, these loans help cover big expenses without draining your cash flow. 

Managing your finances well is a key part of the application process, and most contractors find that HVAC business software helps them gain real-time visibility into spending, revenue, and profitability.

What Types of Loans Are Available for HVAC Businesses?

Every HVAC business is different, and no two have the same financing needs. Some contractors might just need a quick cash injection to get through the off-season. Others might be looking at a major fleet upgrade or expanding their entire shop.

The good news is that there’s a loan for just about every situation. Each option comes with its own benefits, trade-offs, and approval requirements, so choosing the right fit for your business matters.

Now we’ll take a closer look at the most common loan types that HVAC contractors can turn to, and how each one of them works.

1. Business credit cards

Business credit cards are revolving lines of credit that offer a good starting point for HVAC companies. They let you charge purchases like replacement parts and tools, or quick service expenses, without draining operational accounts. 

Many providers of these cards tempt with a zero percent intro APR, though regular rates can be higher than even personal credit cards. Approval and credit limits are typically between $5,000 and $25,000, but depend on your business’s credit history and financials. 

Over 55 percent of businesses currently use business credit cards to manage their expenses. This means their use far surpasses other types of credit or loans.

2. Equipment financing

Equipment financing is a loan that’s specifically for purchasing tools, machinery, and the systems that keep HVAC businesses going. For contractors, these costs can be significant given the ongoing price increases from manufacturers. Financing your HVAC equipment with regular repayments that cover both the principal and interest means you can spread out those costs over time.

New businesses typically use equipment financing to cover any startup essentials like trucks, duct fabrication tools, and expensive diagnostic equipment. If you’re looking to start an HVAC business, equipment financing is one of the more practical ways to get fully equipped and start serving customers (and make money) quickly. 

3. Business Lines of Credit (LoC)

A business LoC gives HVAC companies flexible access to funds whenever they’re needed. If you’ve ever used a credit card, you’ll find a lot of similarities between it and a LoC.

The main difference is that a line of credit typically offers lower interest rates and higher limits than a credit card. A secured line requires some form of collateral, like vehicles or equipment. An unsecured line doesn’t require collateral, but typically involves a much stricter set of qualifications for approval.  

Once approved, businesses can draw, repay, and reuse the funds as needed.

4. Small-business term loans

A small-business term loan is a lump-sum loan that HVAC companies can repay over a set period (the term) with interest. Companies applying for these small-business loans often launch a new company or buy out an existing one. Term loans are also useful for expanding operations into a franchise, refinancing debt, or funding major investments such as a new office or adding more vehicles to your fleet. 

Terms can be short-term (under a year) or longer (10+ years), depending on your needs and qualifications.

5. SBA-Guaranteed loans

SBA loans are business loans that are backed by the U.S. Small Business Administration, or SBA. The SBA doesn’t actually lend out money directly. Instead, it partners with approved lenders and guarantees a portion of the loan. For lenders, this reduces risk and makes it easier for HVAC businesses to get approved. 

Two of the most common options are SBA 7(a) loans, which can be used for working capital, equipment, or real estate. The other type is the SBA 504 loan, which focuses on major fixed assets like buildings or land. 

Loan amounts can range from small sums to several million dollars, and they often come with competitive rates and longer repayment terms. 

6. Microloans

Microloans are small-scale loans designed to help with startup costs, expansion, or other short-term needs. They can be issued for upper limits of around $50,000, with the average microloan being $13,000, according to the SBA. This is typically enough to cover common HVAC business expenses like a used service vehicle, essential tools, or initial inventory.

These loans are usually offered through nonprofit, community-based lenders that also offer services like business training and mentoring—well worth it if you’re just starting out.

7. Working capital loans

Working capital loans are like a quick top-up for your business bank account. It’s financing you can use to cover the everyday stuff that keeps your HVAC company running. Payroll, fuel, inventory, and bills are all examples of things that working capital loans can cover. 

These are ultra short-term loans, so you’ll usually pay them back within about a year, sometimes sooner. Many don’t require any collateral, which is a big plus. However, this convenience can come at the cost of higher interest rates. Some lenders also tie them to your personal credit, so be aware that any late payments can adversely affect even your personal credit rating.

How Can HVAC Contractors Qualify for Business Loans?

Lenders want to loan out money, but they also need to know your business can repay those loans, plus the interest. Often, that means looking at your track record, your numbers, and sometimes even your assets. 

The stronger these factors are, the more options you’ll have, and the better your rates will be.

Let’s take a deeper look at some of the things lenders will typically want to review:

1. Time in business

Simply put, lenders prefer an HVAC company that’s been running (preferably successfully) for at least two years because it shows stability. 

If you’re just starting out, newer contractors can still explore microloans and startup loans, though approval requirements will likely be strict.

2. Annual revenue

Loan providers usually set a minimum annual revenue, often around the $100,000 to $250,000 mark. Meeting (or exceeding) that shows you can handle repayments. 

When you accurately track your finances, it makes it easier to provide proof during the application process and gives lenders the confidence they need to give your loan the stamp of approval.

3. Credit scores

When applying for business loans, both business and personal credit scores matter. For most loans over a term, lenders will want to see personal scores of 680+ and business scores showing significant credit history. 

Some products, like credit cards or microloans, may allow for lower scores, but it’s likely you will be paying more in interest. Good credit opens more doors and gets your business better terms.

4. Debt-to-Income ratio

If your business already has a lot of debt, lenders might hesitate to add more. They want to see enough cash flow left over after expenses and existing repayments to comfortably cover any new loan payments. 

Paying down existing balances or consolidating any high-interest debts can improve your ratio and make your application look much stronger.

How Do You Apply for an HVAC Business Loan?

Getting business loans for an HVAC business is a process and not just a case of filling out a few forms. From shopping around for lenders to the day when the funds hit your account, there are a few steps to cover.

Here’s how most HVAC contractors progress from idea to funding:

1. Research

Start by comparing the loan types we’ve mentioned, looking at the interest rates and repayment terms specifically. Consider whether you need a quick, short-term boost or a much larger loan. 

Each option has its own pros and cons, so carefully line them up side-by-side before making a decision. 

2. Documentation

Most leaders want to see recent documentation. It’s likely you will be asked for the following, so get these prepared in advance:

• Bank statements

• Business licenses

• Tax returns

• Financial reports 

Organizing these documents and records well can speed up approvals and make you look reliable. It’s often a good idea to have your business accountant go over these documents before submission. 

3. Application

Next, you’ll be filling out the lender’s application form. This can be done in person, but it’s becoming more common to see these forms available online as well. 

Online lenders often have faster and more streamlined forms, while banks may require more paperwork. Either way, the most important thing is to be accurate.

4. Approval

Approval timelines vary quite widely. Some online lenders give an answer within a few hours, while SBA or long-term loans can take weeks before you even get a phone call. 

During the approvals window, expect a credit check, financial review, and possibly a follow-up call. 

5. Funding

If your HVAC business loan is approved, congratulations! Your funds will likely be sent as a lump sum or made available as a credit line. Now is the time to start adopting good habits. Keep track of how the money is used, as you’ll need it to show lenders the results when applying for future financing. 

And of course, it goes without saying, keep your repayments up to date.

What Are Common Mistakes to Avoid When Seeking HVAC Business Funding?

The world of financing is complex, and even the most experienced HVAC contractors slip up during the application process. Some of the most common business financing mistakes we’ve seen are:

• Picking the wrong loan type: Overpaying interest and getting stuck with repayment scales you can’t stick to happens when you don’t match the loan type to your business needs. 

• Applying with missing documentation: Lenders want to see the full picture. If you apply with incomplete documentation, applications stall, confidence falls, and you may even be denied the application. Double-check everything before you submit.

• Overborrowing: Taking more than you need can and will put a huge strain on your cash flow. If you’re not careful with repayments, your credit score can be negatively impacted, and neglecting your score is one of the biggest business financing mistakes you can make.

• Mismanaging the funds post-approval: Keep track of where the money is going. Without clear oversight and rigid documentation, the funds can quickly evaporate into day-to-day expenses.

Avoiding these mistakes will save you time, money, and your credit score, but even with all the right moves, loans can still come with plenty of risk.

What Are the Risks of Taking Out an HVAC Business Loan?

Loans are a lifeline, and they’re increasingly becoming a normal part of business operations, expansion, and growth. However, they’re not without their downsides. These are the most common risks associated with HVAC business loans.

• High interest rates: Especially true with short-term loans and credit cards. These interest rates can eat into profit margins if revenue drops during slow seasons.

• Collateral loss: No one ever thinks it can happen to them, but it can. Those trucks and the equipment you listed as collateral? Defaulting means losing those assets.

• Long-term debt burden: Even when paying repayments steadily, multi-year loans can limit your ability to invest in other areas of the business.

• Variable rate changes: If your line of credit or loan has a variable interest rate, your payments could increase over time as official interest rates are raised.

Understanding these risks before you start applying makes it easier to choose financing that’s going to support your HVAC business without putting it in a tight spot later on.

Where Can You Find the Best HVAC Business Loans?

The ‘best’ lender isn’t the same for every single HVAC contractor. It depends on your credit profile, how quickly you need the funds, and what exactly you need the money for. 

Popular choices include:

• Local banks: Often offer a more personalized service and competitive rates.

• Credit unions: Flexible terms and member-focused.

• Online lenders: Faster application and approval process, but watch out for higher interest rates.

• HVAC-specific lenders: These financiers understand the ups and downs of seasonal revenue cycles. They also have a better feel for your business overall. 

• Equipment financing companies: They focus on funding tools, vehicles, and systems. 

• SBA-approved lenders: Offer loans backed by the Small Business Administration. 

Whichever route you choose, you’ll need a thorough financial profile to improve your odds of approval. A recent HVAC business valuation can show lenders the true worth of your company and make your application much stronger.

What Are Alternatives to Business Loans for HVAC Companies?

Loans aren’t the only way to get the funding you need. Depending on your situation, these alternatives might be a better fit:

• Grants: Local governments, industry groups, and utility companies offer grants to support energy-efficient projects or workforce development.

• Equipment leasing: Allows for the use of new trucks, tools, or HVAC systems without the upfront cost of buying. Great for the short-term, but beware of the balloon payment toward the end of the lease.

• Angel investors or business partners: Provide capital in exchange for equity or a share of profits. This does require giving up some control or ownership of your business.

• Vendor financing: Some suppliers do offer payment plans for large orders. This lets you spread out costs while keeping cash free for other purposes. 

Each option has trade-offs, but they can keep your business moving without taking on traditional debt.

How Can You Improve Your Chances of Getting Approved for an HVAC Loan?

Nowadays, loan readiness goes beyond just nurturing your credit score. Lenders want to see a healthy and well-run business that’s likely to pay on time, every time. 

There are practical steps you can take to make your application stronger and your terms more favorable. Let’s take a look at a few you can take right now:

Improve your personal and business credit scores

Lenders want to see a strong credit rating because it shows you’re reliable. Check your credit reports regularly for errors, pay bills on time, and keep credit use low. Reducing existing balances helps as well. The better your personal and business scores, the more likely you are to qualify. 

Show consistent and healthy cash flow

Lenders need proof of your business earnings and to see that you’re capable of regularly making loan repayments. That means meticulous income tracking, controlling expenses, and reducing unpaid invoices. 

ServiceTitan’s HVAC invoicing tools make this process easier. You can convert estimates to invoices instantly with professional templates, send them by email with direct payment links, and accept credit cards or cash out in the field.

The automated invoice capture feature keeps every payment logged without manual entry, while the invoicing dashboard gives you a real-time view of receivables. 

Increased visibility like this helps you monitor cash flow and keep accurate financial records—a sign of a financially mature HVAC business.

Reduce existing debts and liabilities

Paying down existing debt helps to improve your debt-to-income ratio and makes you less risky in the eyes of lenders. Pay down the high-interest balances first, or consider refinancing to reduce overall monthly payments. 

Build a strong business plan with growth projections

Include clear financial forecasts, marketing strategies, and operational plans that outline how the loan is going to drive more revenue. A thorough business plan signals to lenders that your HVAC company is stable and actually prepared for growth. 

Demonstrate business stability and industry experience

Showcase your years in business by showing off your skilled team members and positive feedback from customers. Lenders see proven track records as lower risk, especially when backed by consistent performance. Showing things like how you weather seasonal shifts can really build confidence in your ability to repay.

Centralize accounting and ensure real-time financial accuracy

Pulling everything together into one place is the best way to keep track of your finances. ServiceTitan’s accounting features integrate with QuickBooks and Sage Intacct to sync your HVAC job data with your books automatically.

This means no more manual entry, and accounts receivable and payable are always up-to-date. It shows that your HVAC finances are accurate, current, and loan-ready. Lenders really value this level of organization.

Over to You!

Securing the right HVAC business loan starts with knowing your options and preparing a strong application. The more organized and financially transparent your business is, the more confident lenders will be in your ability to make repayments and fulfill your obligations. 

Put the tips from this guide into action, and you’ll be in a better position to get the funding your business needs to grow.

ServiceTitan is an all-in-one trade services platform built for contractors who want to run smarter and more profitable operations. Whether you’re growing your crew or expanding your service area, ServiceTitan gives you the tools to run your HVAC business with complete confidence. 

Frequently Asked Questions (FAQs)

Got questions? We’ve worked with enough HVAC businesses to know the most common ones when it comes to business loans. Here are the answers that can save you time when exploring financing options. 

Can you refinance an existing HVAC business loan?

Yes. Refinancing replaces your current loan(s) with a new one that has better terms and ideally a lower interest rate. HVAC companies refinance to reduce their monthly payments, free up cash flow, or consolidate debt.

What is an SBA 7(a) loan for HVAC companies?

The SBA 7(a) is a loan backed by the Small Business Administration, a U.S. agency that provides support to American businesses. The 7(a) loan can fund working capital, equipment, and real estate for HVAC contractors who qualify.

Is it hard to get approved for HVAC financing?

Approval difficulty depends on your credit score, annual revenue, current debt levels, and time in business. Established HVAC businesses tend to have more options and better rates. New businesses can still qualify, but often face higher interest rates and stricter repayment terms. 

How can you get a fast loan for your HVAC business?

Online lenders and alternative financing can offer same-day or next-day approval and funding. To speed things up, have your financial records ready and choose short-term products like merchant cash advance or online business lines of credit. Just be cautious, as fast funding usually means higher rates and less-than-ideal terms.