HVAC work is highly skilled, and your training has undoubtedly paid off in the form of a fulfilling career. But there’s always room for improvement.
Shifting from contractor to business owner or growing your existing HVAC business can take time and cash to get going. We cover your options, what’s necessary to apply and tips to succeed as a small business among big-name competitors.
SharpShooter Funding Business Loan
Min. Loan Amount: $1,000
Max. Loan Amount: $300,000
Interest Rate: Starting at 5.49%
Requirements: Annual business revenue of $60,000
Borrow up to $300,000
Online loan application
SharpShooter Funding Business Loan
SharpShooter Funding offers loans up to $300,000 for small business owners who have been business for at least 100 days and can show a minimum of $5,000 in monthly deposits ($60,000/year).
What loan options should I consider for my HVAC company?
You could get just about any type of business loan as long as you meet the eligibility requirements. Here are four specific loan types that might be most beneficial for an HVAC company due to their features:
Equipment financing. Expensive equipment, like a new truck to get to your jobs, can potentially act as collateral for the loan you need to purchase it. You can think of equipment financing like a typical car loan: You generally get a better rate when there’s something to minimize the risk that comes with lending money. This one is just specific to the industry equipment you need, instead of a new hatchback for your family.
Invoice factoring. Have accounts receivables? You may be able to sell them at a discount to a third party. The transaction is completed when your client pays their open invoice and the funds go to the party you sold to. Invoice factoring often doesn’t require a credit check, which can be useful if you’re just transferring over from independent contractor to business owner.
Canada Small Business Financing Program (CSBFP) Loan. These loans can be applied for through a chartered bank, credit union or a caisse populaire and are at least 75% backed by the Government of Canada. Your business must make under $10 million in revenue annually to be eligible for this program. Because the government will cover a large portion of these loans if you default, it’s easier to qualify for financing. These loans have much lower interest rates than private loans. You can use them to finance the purchase of a property or to fund your business like you would with a term loan.
When you’re reviewing the different types of loans and lenders, make sure to pay attention to the following:
Loan amount. It’s wise to get a loan that isn’t far from the amount that you actually need. Overspending is a big risk when it comes to having more funding than you need, and having less than you need can mean winding up with multiple sources of debt instead of just one.
Loan term. A longer term has the benefit of lower monthly payments but can result in a higher cost overall. Be sure to look at more than just what gets you the smallest cost each month.
Interest rate. One of the clearest indicators of your overall cost is going to be the interest rate you’re charged. Make sure you carefully weigh it against the other factors presented and request the APR when available.
Eligibility. Narrow down your choices easily by looking at what you can actually qualify for. Pre-approval standards like time in business and annual revenue can slim down your search.
Fees and charges. Not all lenders are forthcoming about all of the charges that can be added to the cost of your financing. Make sure to ask about any additional costs outside of the interest rate.
Compare business financing options from top providers
Representative example: Damien expands his HVAC company
Damien’s HVAC company has been growing substantially, and he wants to hire a couple of more employees, upgrade some of his equipment and buy a new work van. Altogether, he needs around $60,000.00 to finance these changes. Damien applies for a business loan from an online lender and is approved, thanks to his solid credit history. He signs the loan documents, and the funds are soon deposited into his business bank account.
Cost of expanding Damien’s HVAC business
Business loan (term loan)
Interest rate (APR)
Origination fee of 3.00% ($1,800.00)
Application fee of $0 (waived by lender)
Total loan cost
*The information in this example, including rates, fees and terms, is provided as a representative transaction. The actual cost of the product may vary depending on the retailer, the product specs and other factors.
What do I need to apply?
Depending on the lender you approach and the whole of your needs, you may need more or less documentation.
Relevant licenses. It may be necessary to provide proof that you’re certified to do heating, ventilation and air conditioning work in your area. Make sure to keep copies of up-to-date licenses.
Personal documents. Some lenders will consider your personal credit as well as your business finances. In such cases, you may need to present personal bank statements. You’ll also want to have provincial or government-issued ID, such as a driver’s license or passport.
A business plan. Lenders are always looking to minimize risk. Approaching with a well-developed business plan presents a much safer image, and shows that you’re looking to run a successful business.
Proof of income. Lenders may also look at your business revenue and personal income when considering business financing. Have your Notices of Assessment from the past couple of years on hand as well as your business and personal bank statements from the past 3-6 months.
4 tips on getting financing for your HVAC company
Review qualifications before applying. First making sure your business meets minimum eligibility can save you a lot of time. If it doesn’t and you’re set on working with that lender, it may be time to make an appointment and discuss your case before fully applying.
Make sure your business plan shines. Show that you know what you’re doing, and show it on paper. A well-crafted business plan can really make an impact on a lender.
Have the experience to back your plan. Keep a detailed record of your experience as an HVAC professional, including your training and other locations you’ve been licensed in.
Keep data on your revenue. Show what you’re doing through easily consumable data. Show how the loan will factor into you existing business through a chart. Remember that you’re looking to increase trust with the lender, and transparency can help.
6 tips to beat out your big-time HVAC competitors
Treat every job like your reputation depends on it. Be kind, courteous and on time to the best of your ability. Clearly communicate any change in timing or potential costs. If you have contractors performing on-the-site services, be sure they’re representing your company with professionalism.
Know your work and revenue before you grow. It can be tempting to expand full-throttle when you have the chance, but make sure your business will keep up with that growth throughout the year. Account for seasonal lulls to avoid ending up with too many employees and too few jobs.
Don’t be shy about encouraging reviews. When you invest time into directing people toward review sites you’ve registered with, like Yelp or Google, you can grow your reputation. It’s good marketing that costs you little more than a friendly smile.
Know your product and services. Talk to your customers about their options. Give professional recommendations backed by experience. But also listen to your customers’ wants, framing your pitch with them in mind.
Build trust in your community. Big names are recognizable, but they aren’t always personal. Building goodwill earns respect that can lead to both recognizing your name and knowing that your HVAC comes from someone good within the community.
Keep competitive rates. Even if you can’t match the leading competitor, getting close and staying true to your community can help customers see your business as friendlier and reliable, with the bonus of fair prices.
You’ve got a plan on lock. Now it’s time to follow through and take your HVAC business forward. To best prepare for success, address potential pain points ahead of applying for financing.
Lenders have different timetables when it comes to depositing your approved funds. Some will send you the money within a business day of approval, but others can take a week or longer. Nail down expected turnaround during the application stage of funding.
Yes, though typically as an introductory rate. These rates usually last through your first 6-12 months. Learn more about business credit cards here.
Yes. Some lenders specialize in business loans for businesses for bad credit borrowers. Rates may be higher, however, because there’s typically more risk associated with the loan. Check out our guide to building business credit to find out how to make it easier to qualify for loans.
Rhys Subitch is a writer and editor at Finder who tackles topics across the site. With half a decade of experience researching, editing and writing for a Fortune 500 company, university and several independent publications, Rhys brings readers the most up-to-date and curated info on all things finance.
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