Summertime is rush time for your HVAC business! Before you know it, you’ll be running all over town, handling all sorts of projects – from routine maintenance, like cleaning dirty filters and coils, to more urgent requests, like broken parts. Sometimes, you need to explore your HVAC financing options to really heat your business up.

But what is HVAC financing, and how does financing work in HVAC businesses?

HVAC financing describes the various ways that contractors access capital in the industry. From term loans and equipment financing to lines of credit and revenue-based options, there are many different structures to help you meet your goals.

Don’t head into the summer without the tools and resources you need for your busiest season. Continue reading for everything you need to know about HVAC financing options and, more importantly, how to leverage them to cultivate sustainable growth in your business.

What Is HVAC Financing?

HVAC financing provides contractors with the funds needed to tackle challenges and afford growth opportunities. Whether it’s purchasing new equipment, buying upfront materials, or hiring new staff, HVAC financing is a powerful tool to grow and scale your business.

There are options that provide a lump sum of money to manage over a set schedule, and there are more flexible options, like business lines of credit, that provide flexible access to capital on an as-needed basis. The “best” option will depend on your business, goals, and specific circumstances, although flexible financing is a great option for managing cash flow in the HVAC industry.

How Does Financing Work in HVAC?

HVAC financing starts with identifying a need for capital in your business. This can be a challenge that’s causing friction or an opportunity to invest in your business and grow. In either case, you’ll need to find the right lender.

Bank Lenders Most entrepreneurs start by speaking with the bank they do business with, but this option won’t work for every business. Banks and credit unions uphold strict eligibility requirements and are very selective in the businesses they finance. Still, they offer some of the lowest interest rates.
Non-Bank Lenders Non-bank lenders, on the other hand, are essentially the opposite. They feature more accessible eligibility criteria, faster funding times, and higher interest rates. The increased cost of capital might sound daunting, especially for newer businesses, but the price of your financing matters little when you use the funds to invest in revenue-driving opportunities.

You should apply with multiple bank and non-bank lenders to compare their offers and learn the terms you qualify for. Once you’ve found one that fits your business and goals, you’ll speak with that lender and ask questions about the terms you’re approved for.

There’s usually room for some negotiation. Don’t be afraid to ask questions and push for lower rates/longer terms if that’s what your business needs. If you’re working with the right lender, you’ll finalize your contract with terms that allow you to grow without restraint. Then, you’ll sign your name, and the funds should arrive in your business bank account promptly.

Now begins the repayment process. You’ll make regular payments toward your financing on a schedule agreed upon with your lender, with each payment working towards the principal and interest.

You’ll follow this structure from the beginning of your term until the end. Once you’ve paid off your financing in full, you’ll have no debt attached to your business.

Pros and Cons of Financing for HVAC

HVAC financing options act as a tool for entrepreneurs in this space to grow, scale, and develop their businesses. Let’s explore the pros and cons of HVAC financing and see if it’s a good fit for your unique circumstances.

  • Break down large purchases over time
  • Access capital quickly for opportunities and challenges
  • Streamline cash flow
  • Tax advantages
  • Bridge payment gaps
  • Start busy seasons on the right foot
  • May need to offer collateral
  • New businesses may find it difficult to qualify
  • Need to carefully manage repayment to avoid financial consequences
  • Finding the right lender can be challenging

HVAC financing allows contractors to quickly access capital for upcoming jobs, employee certifications, equipment, payroll, and more. You can leverage lump sum funds from a term loan to prepare for an important job, use a business line of credit to purchase materials, or spread out an expensive equipment purchase over time through equipment financing – the choice is yours.

As long as you carefully manage your repayment and don’t overwhelm your business with terms that fit, you can avoid any potential consequences and grow your business without friction.

How Does Funding Help Your HVAC Business?

Applying for funding in advance of the summer rush enables you to keep your company running at peak performance. You can use the extra money in your HVAC business to:

  • Hire and train new employees
  • Enlist help from subcontractors (and never turn down work)
  • Launch a summer marketing campaign
  • Purchase new equipment, tools, and business management systems
  • Offer your customers the latest and greatest in HVAC systems and technologies
  • Meet regulatory standards for certification and safety
  • Pursue additional certifications (or help your employees obtain them)

Making these investments builds trust with your customers and positions your business for growth. When you’re able to provide consistent high-quality service, your recommendations will do the work for you.

This can result in new jobs and more lucrative contracts as customers start to talk up your services.

HVAC Business Loans: Funding and Financing Options for Your Company

Now you know the why of pursuing business funding – but what’s the best way to get the money you need? Here are five common options for handling your HVAC business expenses this summer.

Business Line of Credit

When you need a ready source of cash for routine expenses, a line of credit has you covered. It’s the perfect solution for:

  • Paying recurring bills
  • Keeping payroll consistent
  • Expanding marketing and advertising campaigns
  • Renting special equipment for unusual or difficult jobs

There are no limitations—you can put the funds toward any expense that helps your business. Lines of credit give you flexibility to cover new expenses during times of growth and a cushion during difficult phases.

Look for lenders offering revolving credit lines. This structure provides a credit limit that replenishes every time you make a payment.

You’ll always have funds available, instead of having to apply for another loan once you’ve spent a given amount.

A line of credit puts less strain on your budget, too. The only time you have to worry about fees is when draw additional funds. The rest of the time, the cash is waiting for you when you need it – without the burden of monthly payments.

The bottom line: this HVAC financing option gives you ample funding and flexibility.

Equipment Financing

Your equipment will get a lot of use during the summer. Knowing how to finance HVAC systems and equipment can put you one step ahead of your competition.

Make sure everything is in top condition before the rush hits, and consider HVAC business financing to replace or upgrade whatever isn’t. This is a great option if you want to invest in new equipment or technology, but don’t have enough cash on hand. Using equipment financing to get the best tools now can boost your ROI throughout the season.

Don’t forget about reliable transportation to job sites, either. Your trucks need to get you and your employees to and from every call without delay. If any vehicle in your fleet has been acting up, or you’re simply due for an upgrade, it’s time to act.

Accounts Receivable Financing

Unfortunately, you don’t always get paid for your HVAC service calls before new expenses crop up. Bills keep coming in whether or not your customers pay on time. This HVAC financing option helps you to leverage unpaid invoices to your advantage.

Better invoicing practices can help prevent late payments, but when you still find yourself waiting on your money, there’s accounts receivable financing.

A/R financing is a simple concept: You sell one or more of your outstanding invoices to a lender and get a percentage of the money right away. When the invoice is paid, you receive the rest (minus fees).

By eliminating gaps between invoicing and payment, you can take on new jobs and keep money flowing into your business all summer.

Small Business Loans

What about when you need to make big purchases?

HVAC business loans use a traditional term loan structure to give you access to larger amounts. You receive a set amount of funding and pay it off over a period of time, usually anywhere from a few months to a few years.

Business loans are best for:

  • Restocking inventory for the summer season
  • Hiring and training a new group of employees
  • Overhauling your marketing strategy
  • Increasing your online presence

Online lenders are able to rapidly underwrite loans, at a much faster pace than banks. Speedy funding is useful if you require extra money in the middle of a crazy summer schedule.

Although it’s better to pursue a loan before you find yourself in dire need of cash, an online lender can be a valuable resource when time is of the essence.

Can I Get HVAC Financing With Bad Credit?

“I don’t have the best credit score. How can I get HVAC financing with bad credit?”

The simple answer? It depends on your business, the lender you’re working with, and the type of financing you’re looking to secure.

A poor FICO score can stand in the way of most bank financing options, but non-bank lenders don’t always uphold strict credit score requirements. For example, National Business Capital’s 75+ lender marketplace has equipment financing options that don’t require a credit score as long as you have been in business for at least 6 months and generate above $120,000 in annual revenue.

If you’re looking for a specific type of financing and a credit score is standing in your way, you should consider proactively strengthening your score before applying. This is only possible if you don’t need fast funding, of course, but taking this step can help you secure more favorable terms in the future.

Let’s explore the options you qualify for. Complete our digital application today, then speak with our team to learn more about the opportunities we have available for you.

How to Apply for an HVAC Business Loan

At National, we can help you find the best financing option for your HVAC company without jumping through hoops. Not only can we teach you how to finance HVAC systems and equipment with your business’s best interest in mind, but we can match you with multiple options that help you accomplish your goals.

Here’s how it works:

  • Apply Securely Within Minutes – Move through our digital application in minutes, and securely upload your business bank documents with zero risk.
  • Review Your Offers – Compare your offers alongside expert advice from our Business Finance Advisors.
  • Receive Your Funds – With your money in hand, you can tackle challenges and take advantage of opportunities with confidence.

Our simple requirements and quick application process make qualifying simple, and there’s no minimum FICO!

Apply now to get your funding in as little as one day!