Guide · Borrowing

How much can an HVAC or plumbing business borrow?

It depends mostly on your earnings, how much debt you already carry, and how well you get through slow months. Here's how lenders work out the number, with examples you can copy.

Checked November 5, 2026

What similar businesses actually borrow

One analysis of SBA 7(a) records found a typical loan of $155,000 to HVAC and plumbing contractors in fiscal years 2021 through 2026. That's across 6,007 loans. The average was about $437,000, and the middle half ran from $55,800 to $429,100. The typical term was 10 years and the typical starting rate 9.75%.

That shows what's common, not your limit. The 7(a) maximum is $5 million. Your own limit comes from your numbers.

The main limit: debt service coverage

Debt service coverage is your yearly earnings divided by your yearly debt payments, principal and interest together. Lenders usually start from EBITDA (earnings before interest, taxes, depreciation and amortization), adjusted for one-time items.

Most lenders want 1.25x or more. One private summary of SBA's rules lists lower floors: 1.15x for most 7(a) loans above $350,000, and 1.10x at or below that. Your lender can ask for more.

Here's an example. The company is made up: $3 million of revenue at a 15% margin. One software vendor calls 10% to 20% net healthy for HVAC, while another puts the industry average closer to 8% to 12%. Neither shows its underlying data, so use your own numbers.

EBITDA $450,000 Divide by 1.25x $360,000 a year Existing payments −$60,000 a year Room for new payments $300,000 a year ($25,000 a month)

To turn room into a loan size, use the how much can I borrow calculator. At 9.75% over 10 years, $25,000 a month would repay about $1.9 million. That's a ceiling from one test, not a likely offer.

Why your slow months matter

This is where the trades differ from most businesses. HVAC demand peaks in summer and winter and slows in spring and fall. When a business is bought with an SBA loan, one SBA loan broker says lenders check coverage in every month, not just the annual average. Run the same check yourself before any loan.

Say the example company's earnings fall unevenly, and it borrowed right up to the 1.25x limit:

8 busy months at $50,000 $400,000 4 slow months at $12,500 $50,000 Total EBITDA $450,000 Debt payments a month $30,000 Slow month: $12,500 − $30,000 −$17,500 Over 4 slow months −$70,000

The year passes the test, yet the company is $70,000 short in the slow months, before taxes and owner's pay. It would need cash saved from the busy months or a line of credit. Maintenance agreements help here, because they bring in work when the phone is quiet. The same broker puts the industry's renewal rate at 75% to 85% and calls anything below 70% a concern.

The 13-week cash flow template shows how deep your slow stretch goes and how large a line you'd really use.

Vans and equipment

Service businesses often grow one truck at a time. A cargo van can start around $44,000, before shelving and tools. With an equipment loan, what you buy serves as the collateral, which can help you qualify and get a better rate.

Terms are short. Lenders listed on one comparison site run up to about five years, and some advertise no down payment. Advertised best rates aren't what everyone gets, so compare real quotes.

Three vans financed at $40,000 each, at an example rate of 9% over five years:

Loan $120,000 Payment $2,491 a month $29,892 a year Room left $270,108 a year

Lines of credit

A line of credit covers slow-season payroll and parts. Many lines are capped by a borrowing base, a share of what customers owe you. Published ranges are 70% to 85% of receivables, though that figure comes from a lender writing about construction subcontractors.

Watch for three things:

Paid-on-the-day work. If homeowners pay when the job is done, you have few receivables to borrow against. That helps cash, but it can shrink this kind of line.
Old invoices. Invoices past 90 days are the most common exclusion.
One big customer. A builder or property manager's balance above about 20% to 25% of eligible receivables is often left out.

Receivables also tend to fall when work slows, which is when you need the line. Say you have $100,000 of eligible receivables in spring. At 80%, you can draw $80,000. That covers the $70,000 gap above only if nothing else has been drawn.

If the loan is to buy a shop

Different rules apply. Since October 1, 2026, trade press reports that first-time acquisitions under SBA's rules need 1.25x coverage on historical earnings and at least 10% of the project in equity, with the buyer's own money covering at least half of that. A broker reports HVAC companies selling at 3x to 4x seller's discretionary earnings (SDE: profit plus the owner's pay and perks).

An example for a shop with $450,000 of SDE and no other debt, assuming you pay a manager, or yourself, $100,000:

SDE $450,000 Less pay to run it −$100,000 Cash for debt $350,000 Divide by 1.25x $280,000 a year ($23,333 a month) Largest loan (9.75%, 10 years) about $1.78 million Project with 10% equity about $1.98 million Your equity about $198,000

The project covers the price plus any working capital and fees. Against that, 3x to 4x would be a price of $1.35 million to $1.8 million. Expect questions about your trade experience, who holds the contractor license, and technicians' EPA 608 certifications. If the seller holds the license, settle that before you close.

SBA loans in short

Sizes. Up to $5 million, or $500,000 under SBA Express.
Terms. Ten years or less, up to 25 for real estate or long-lived equipment. A longer term lowers the yearly payment, so it adds room.
Rate caps. For variable-rate loans over $350,000, the maximum is the base rate plus 3%. Smaller loans allow more, up to plus 6.5%. With prime at 7.00% in late October 2026, plus 3% is 10%.
Guaranty. Every owner of 20% or more must sign personally.

Be careful with fast money

Short terms use up coverage quickly. The same comparison site lists one lender with 12- to 24-month terms and says its APRs run well above bank or SBA loans. Compare the yearly cost of $100,000, using example rates:

10 years at 9.75% $15,692 a year 2 years at 20% $61,075 a year

How to borrow more

Sell maintenance agreements. Steadier slow months make your earnings easier to trust.
Refinance short-term debt. A longer term frees up coverage.
Collect old invoices. Getting them under 90 days can return them to your borrowing base.
Clean up your books. Separate personal spending and one-time costs, so your adjusted earnings hold up.
Apply before the slow season. Your recent numbers will look stronger, and you won't be borrowing under pressure.

This guide is general information, not financial or legal advice. Rates and lender rules change, so confirm them with your lender.

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Sources

All checked November 5, 2026. Several are lender, broker or software company pages, so treat their figures as a guide.