How to Buy a HVAC Or Plumbing Company With an SBA Loan
An HVAC or plumbing company runs on a licence that is often tied to a person, a crew of technicians who can leave, and a list of customers who call when something breaks. Buy those three things carefully and the trucks and tools take care of themselves.
See if your deal qualifies →SBA FOIA 7(a) loan-level data, NAICS 23822*, FY2021 through FY2026.
What you need to put in
Ten percent of the total project cost is the SBA minimum for buying a business, and the project cost is everything the loan pays for: the purchase price, the closing costs, and the working capital you are borrowing to get through the first months.
Half of that ten percent can be a seller note, which is the structure most buyers are hoping for. The catch since June 2025 is that the note has to be on full standby for the entire life of the SBA loan, meaning no principal and no interest paid to the seller for ten years. A note on two year standby, which used to qualify, no longer counts toward your injection. The other five percent has to be real money, and the lender will trace where it came from.
On rate, an acquisition loan of this size prices near Prime plus 2.75 percent, with Prime plus 3.0 percent the SBA ceiling above $350,000. Ten year term, no balloon, and no prepayment penalty at that maturity. If real estate is part of the purchase the term stretches and the arithmetic changes.
What to diligence in a HVAC or plumbing company
The generic acquisition checklist covers the financials. These are the ones specific to this sector, and they are where deals here actually go wrong.
Whose licence is the company working under?
Contractor licences are often qualified by one person who passed the exams and holds the experience, and that person is frequently the seller. In California, for example, a company's licence is qualified by an officer or by a permanent employee working at least 32 hours a week, and if that person leaves, the company has 90 days to replace them before the licence is suspended. In a full SBA buyout the seller cannot stay on as an officer or employee, only as a consultant for up to 24 months, so in a state like California the seller cannot keep qualifying the licence. Check your own state's rules and plan who will qualify the company on the day you close: you, a licensed manager who is staying, or a new hire.
Service agreements are the steadiest revenue you are buying
Maintenance plans bring in recurring revenue and lead to replacement jobs. Ask for the number of active agreements, what they cost, how many renew each year, and how they are billed. If you are buying the assets rather than the company, check that the agreements can be assigned to you.
Know which kind of work pays the bills
Residential service and replacement, commercial service and new construction behave very differently. New construction work for builders and general contractors can bring retainage, slow payment and a few large customers. Get revenue split by type of work and by top customers for at least three years, and look at the seasonal swing month by month.
Technicians, certifications and the trucks
Ask how many technicians are licensed, how long each has been there, and how they are paid. Anyone who services equipment in a way that could release refrigerant must hold EPA Section 608 certification. List the vehicles with titles, liens, mileage and who drives each one, and separate the tools that go with the sale from the ones technicians own.
Warranty, callbacks and customer deposits
Find out what labour warranties the company gives and how many callbacks it has had. Ask about open jobs, deposits taken for work not yet done, and any claims or disputes. Deposits for unfinished work are a liability you inherit.
Licensing and regulation in this sector vary by state and change. This is a general description, not advice on your deal, so check anything you are going to rely on against your own state's current rules.
What the lender will ask you about
Beyond the usual credit questions. Have these answered before the file goes in and you save a round trip.
- ·Who qualifies the contractor licence after closing, and what does your state require of that person?
- ·How many active service agreements are there, and what share renew each year?
- ·How is revenue split between residential, commercial and new construction, and who are the largest customers?
- ·Which technicians are staying, and how much of the billable work does the seller do personally?
Who actually lends on HVAC and plumbing companies
The Huntington National Bank has approved more loans in this sector than anyone else since FY2021, at an average of $255K. A lender who has done dozens of these already knows what the licence transfer looks like, which is worth more than a slightly better rate.
| # | Lender | Loans | Total Volume | Avg Loan |
|---|---|---|---|---|
| 1 | The Huntington National Bank | 663 | $169.3M | $255K |
| 2 | U.S. Bank, National Association | 446 | $74.9M | $168K |
| 3 | TD Bank, National Association | 355 | $53.9M | $152K |
| 4 | Live Oak Banking Company | 331 | $296.0M | $894K |
| 5 | Northeast Bank | 240 | $46.8M | $195K |
| 6 | JPMorgan Chase Bank, National Association | 213 | $52.8M | $248K |
| 7 | Manufacturers and Traders Trust Company | 192 | $36.8M | $192K |
| 8 | BayFirst National Bank | 175 | $36.3M | $207K |
Source: SBA FOIA 7(a) loan-level data, NAICS 23822*, FY2021 through FY2026. Lenders with fewer than 3 approved loans in the sector are excluded.
Full hvac & plumbing lending data →Busiest states for HVAC and plumbing companies
Buying a HVAC or plumbing company: common questions
Can I buy an HVAC or plumbing business if I'm not licensed?
Yes, if the company will still have a qualified licence holder after closing. That can be a licensed manager who stays or someone you hire, documented before you go to the lender. Lenders will also want to see that you can run the business side.
Can the seller stay on as the licence holder?
Not as an officer or employee in a full SBA buyout. The seller can consult for up to 24 months, but in states that require the qualifier to be an officer or employee, as California does, a consultant cannot hold that role.
Do service agreements count toward the price?
They feed into the business valuation through the earnings they produce. A large base of agreements that renew year after year supports the price; a base that is shrinking does not.
How much does it cost to buy a HVAC or plumbing company?
Across the sector, the average approved SBA 7(a) loan is $437K, taken over 6,007 loans since FY2021. That is the loan, not the purchase price: the loan usually also carries closing costs and working capital, and the buyer puts in at least ten percent on top. Use it as a sense of scale rather than a quote.
How long does an SBA loan to buy a HVAC or plumbing company take?
Sixty to ninety days from a complete file is the honest range for a straightforward acquisition, and it is the FILE that sets the clock rather than the bank. A lender with SBA Preferred Lender status approves in house instead of waiting on SBA review, which takes weeks out. Anything that needs a third party, an appraisal, an environmental report, a licence transfer, runs on its own schedule.
What can the loan actually pay for?
The purchase price of the business, the closing costs, working capital for the transition, and the real estate if you are buying the building too. A 7(a) loan for goodwill is typically a ten year term with no balloon and no prepayment penalty. Add owner-occupied real estate and the term stretches, up to twenty five years where the property is the majority of the project.
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