Introduction
Starting a new HVAC contracting business can be both exciting and challenging. As a new shop in the industry, securing the right financing is crucial to ensure you have the necessary resources to grow and succeed. Whether you need to purchase equipment, manage cash flow, or expand your operations, finding the right loan or financing option can make all the difference. Below, we explore several financing options tailored for HVAC contractors in their first two years of operation.
Financing Options for New HVAC Contractors
1. Live Oak Bank
Live Oak Bank stands out as the nation's top SBA 7(a) lender, with a specialized lending team dedicated to HVAC, plumbing, and electrical contractors. This focus ensures that new HVAC businesses can access loans up to $5 million at traditional bank rates. The SBA 7(a) loans are priced at Prime plus a negotiated margin, offering a variable rate that can be competitive for startups. With a strong rating of 4.7, Live Oak Bank is a reliable partner for new contractors looking to establish a solid financial foundation.
Crest Capital offers nearly two decades of experience in HVAC and climate-control financing, making it a seasoned choice for new contractors. They provide Section 179-friendly loans and leases up to approximately $1 million, with application-only tiers that simplify the process for startups. While pricing details are not publicly listed, Crest Capital's focus on equipment financing makes it an ideal option for contractors aiming to scale their fleet and equipment base early on.
As a long-standing alternative lender, National Funding provides small business loans up to $500,000 and HVAC equipment financing up to $150,000. A notable feature is their early-payoff discounts, which reward contractors who pay off their debt ahead of schedule. This can be particularly beneficial for new businesses looking to manage their cash flow efficiently. Although pricing details are not publicly listed, National Funding's flexible options and 4.5 rating make it a solid choice for new HVAC contractors.
AdvancePoint Capital operates as a business-lending marketplace, offering a dedicated product suite for HVAC contractors. Their offerings include term loans, lines of credit, equipment financing, and SBA loans up to $500,000. The advantage of working with a marketplace is the ability to match with the right product for your specific needs, whether it's managing seasonal cash flow or pursuing growth opportunities. With a 4.5 rating, AdvancePoint Capital provides a versatile financing solution for new HVAC businesses.
5. Credibly
Credibly is an alternative lender that provides accessible financing options for newer HVAC shops. They offer working capital loans, merchant cash advances, lines of credit, and equipment financing, with minimum requirements of around a 550 FICO score and six months in business. This makes Credibly a practical fit for startups that may not yet qualify for traditional SBA or bank financing. With factor rates starting at 1.15 and a 4.4 rating, Credibly offers a viable path for new contractors seeking flexible funding solutions.
Conclusion
For new HVAC contractors, securing the right financing is essential to building a successful business. Whether you need to invest in equipment, manage cash flow, or expand your operations, the options outlined above provide a range of solutions tailored to the unique needs of startups. By choosing the right lender and loan product, you can establish a minimum viable setup that supports your business goals and sets the stage for future growth.