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Business owners like plumbers and HVAC specialists have a unique set of business needs, and sometimes there isn’t enough cash to cover those business expenses.

Equipment in the plumbing and HVAC industries doesn’t come cheap, and if you have to wait for your customer to pay you to cover the expenses, your business will suffer. This is where business financing comes in handy: taking out a loan or line of credit can ensure you have the working capital you need to keep your business running smoothly.

How a Plumbing and HVAC Business Loan Can Help Your Business

Your plumbing or HVAC business needs a steady cash flow, but when projects come in spurts, or you have to wait a few weeks to get paid for a job, it can put a strain on your finances.

Small business loans can make sure you always have capital to cover your business expenses, like paying your HVAC contractors, buying supplies, or investing in the equipment you need to do your job. And during off-peak seasons, access to capital allows you to pay your bills on time.

Types of Financing for Plumbing and HVAC Businesses

Plumbing and HVAC companies have a wide range of financing options, so there’s sure to be one that will meet your needs.

Working capital loans

Banks and credit unions offer long-term financing at good rates, although you may find it harder to qualify than other options. If you already have a long-standing business relationship with your bank, this might be a good place to start, however, shop around as you might find a better rate elsewhere.

SBA Loans

The Small Business Administration’s 7(a) loan program is a popular choice for small business owners due to its low rates and long repayment period. You can use SBA loans to purchase real estate and equipment, as well as for working capital.

Credit line

If you don’t need a lump sum of cash all at once, consider a business line of credit. You are approved for a fixed amount and can borrow up to that amount at any time. Once you pay it back, you can borrow it again, unlike a loan which, once paid back, is done.

Equipment financing

If you are specifically looking for capital to purchase plumbing or HVAC equipment, such as an air conditioning unit, equipment loans are a good choice. Since the equipment you buy serves as collateral, you can usually get good rates on these loans.

Credit card

Business credit cards are another financing option for your business, but keep in mind that most have high interest rates. Pay your balance in full each month and you won’t have to pay this fee.

Short term loan

If your business has bad credit and cannot qualify for the options above, consider short-term loans. These lenders consider factors other than your professional and personal credit scores, although these loans are high interest.

Merchant Cash Advance

Although it’s not actually a loan, a cash advance can also get you the funds you’re looking for. You receive an advance of an amount based on your average credit card sales and repay that amount daily or weekly from your transactions.

How to Qualify for a Plumbing and HVAC Commercial Loan

Lenders use many factors to determine your eligibility for business loans.

Your professional or personal credit ratings may be taken into account. These scores tell a potential lender how risky you are in terms of the likelihood of loan repayment. The lower your credit scores, the higher the risk you can project.

Although there are lenders who will lend you if you have fair or bad credit, or if your business credit is non-existent, learn how to establish business credit so that you can benefit from better rates in the future.

Lenders can also look at how long you’ve been in business. Most startups struggle to find lenders as they can be considered more volatile, given their lack of business experience. If you’ve been in business for two or more years, you may qualify for more financing options.

You may also be required to achieve a certain annual income to qualify. Again, this is because the lender wants to be sure that you will be able to repay the loan easily.

How to Apply for a Plumbing and HVAC Business Loan

Loan applications may vary from lender to lender, but certain aspects of the CVC business financing application process are consistent.

Some online lenders have very short applications that only take a few minutes to complete, and you will receive a decision automatically. If you are applying through a traditional bank, you may need to visit a local branch and apply through a banker. In this case, it may take several days or weeks before you have a decision.

As a borrower, you will be asked to provide information about your business (address, location, length of time in business) and about yourself (name, address, social security number).

You may be asked to provide bank statements to prove your annual income or other financial statements. You will also be asked for the loan amount you are requesting.

Once you submit your application, you will receive a decision (timeframe will vary by company). If your application is approved, you will be presented with your loan options, interest rate and loan terms. Sign your loan agreement and your funds will be deposited into your business bank account within business days.

Your monthly payments will begin a few weeks after you receive your funds, and you may have the option of making automated payments, which is convenient and prevents you from forgetting and missing a payment.

Choosing the right loan for your plumbing or HVAC business

With so many financing options, which one is right for you? There is no single answer; it will depend on the specific needs of your HVAC or plumbing business.

Be sure to shop around to ensure you get the best loan options and interest rates possible. Typically, you can see if you prequalify with a lender without it affecting your credit. Also read the refund terms to understand the consequences if you miss a payment or pay late.

This article was originally written on April 22, 2021.

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