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📅 Last Updated: April 3, 2023
✏️ Written By Priyanka Correia, BComm
🕵️ Fact-Checked by Caitlin Wood
Business Loans HVAC

The HVAC (heating, ventilation, and air conditioning) service industry has rapidly become one of the most popular trades on the job market due to its in-demand nature and high rate of pay. In fact, it’s a service that almost everyone needs. This makes owning an HVAC business a great choice for many Canadians. If you own an HVAC business and you’re looking to purchase better equipment or hire a larger team, a business loan is the best way you can invest in the success of your own business. 

Check out this guide on starting a business in Canada.

How to Grow Your HVAC Business With a Loan

There are plenty of different costs that you’ll need to consider to keep your business running smoothly and a business loan can help you tackle all of them. In fact, there are endless ways that you can use a business loan to grow, improve, and expand your business, including:

Purchasing Equipment 

Running an HVAC business requires financing specific equipment and tools. A business loan can help finance the equipment you need as well as a van or truck to meet clients and transport your equipment. 

Finance Your Supplies 

A business loan can help you purchase the necessary supplies to fill your inventory such as AC units, heat pumps, spare parts, ventilation ducts, and control circuits. You can also use it to purchase new uniforms, gloves, boots, and safety equipment. Lastly, a business loan can help you purchase fuel, new parts, or repairs for your company vehicles

To Expand Your Business

If you plan on expanding your business, you can use a business loan to remodel, modify, or move to a larger location. It can also be used to upgrade the look of your business location as well as your company vehicles. 

To Hire and Train New Employees

You can use a business loan to hire and train new employees, to pay for any education/ certifications your employees might need and to make payroll on time.

Best HVAC Business Loan Lenders

AmountAPRTerm (months)
SharpShooter Funding1k-300kFee-Based: Starting at 9%12- 60 Learn more
OnDeck5k-300k8% – 29% 6-18Learn more
Lending Loop1k-500k+5.9%3-60Learn more
Thinking CapitalUp to 300k8%-22%6-12 Learn more
Merchant Growth5k-500k-6-18Learn more
BDC100K +6.05% +60Learn more
IOU Financial5K-100k15%+12-18Learn more

What do Lenders Look For When Approving a Business Loan Applicant?

  • Credit Score – Lenders will evaluate both your personal and business credit score to check how responsible you are as a borrower. 
  • Financial Details – In order to determine your ability to repay debt, lenders will evaluate numerous aspects of your business finances. Lenders may ask for your net income statement, cash flow statements, monthly sales data, and tax returns
  • Collateral – If you’re providing collateral to secure the loan, you’ll need to provide proof of your asset’s value. 
  • Time in Business – Alternative lenders typically require a business to be at least 3 – 6 months old. The longer you’ve been in business, the less risky you’ll seem to the lender. 
  • Business Plan – Lenders may also request you provide a business plan. A business plan allows lenders to assess the viability of your business. It typically includes your business goals, strengths, risks, and financial projections. 

Additional Financing Options To Fund Your HVAC Business

Equipment Loan

An equipment loan is an alternative way to finance your HVAC business equipment. It’s similar to a business loan, except it secures itself against the equipment you purchase. This in turn leads to faster approvals and lower rates. However, it’s important to remember that lenders typically lend up to 80% of the equipment price, so you’ll have to put up a down payment of 20%. 

Business Line of Credit

Equipment repairs, vehicle repairs, and other emergency costs can affect your ability to offer your HVAC services. Moreover, paying for expenses like these, upfront can lead to cash flow shortages. A business line of credit is a great way to finance such expenses as you’re able to access the funds immediately. Like a credit card, you can withdraw as much as you need up to a credit limit, which you can then reuse as you pay it back. Moreover, interest is only paid on the amount you use. 

Government Financing

The Government of Canada offers a number of financing programs for small Canadian businesses. One of the most popular programs out there is the Canadian Small Business Financing Program (CSBFP). You can receive up to $ 1million dollars for your HVAC business of which $350,000 can be used for your equipment or leasehold improvements. You can apply for this loan through any major financial institution.  

Frequently Asked Questions

What documents do I need to apply for a business loan? 

Depending on the lender you apply with, you’ll need to supply various documents and information. However, in general, you’ll need to provide proof of identity and income. This includes business license, bank statements, tax returns, revenue statements, a business plan and proof of asset if you’re providing collateral. 

How fast can I get a business loan for my HVAC business? 

If you apply for a business loan with a bank, it can take as long as three months to approve you for a business loan. On the other hand, if you apply with an alternative lender, you can get approved and funded in as little as a week.  

Can I qualify for a business loan if I have poor credit?

Yes, you can qualify for a business loan with poor credit. However, it depends on which lender you apply with. For example, a bank is very unlikely to lend to you if you have bad credit, but an online lender would be more willing. Online lenders usually have flexible lending standards and base their approval on more than just your credit score. They also evaluate your revenue stream, cash flow, debts, and assets

What factors should I consider when getting a loan for my HVAC business? 

Before accepting a business loan, there are a few things you should consider. 
  • Interest rate – one of the most obvious factors that affect the loan cost is the interest rate. Be sure to compare rates and ensure you’re getting the best rate for you. 
  • Term Length – While a long-term loan can provide short-term affordability, it has a higher cost overall. Do the math, and find a term that is short but still affordable. 
  • Fees – Be sure to ask your lender about any administrative fees, origination fees, NSF fees,  prepayment fees, and late payment fees. These fees can easily add a couple of thousand to your loan. 

Can my personal credit affect my ability to get a business loan? 

Yes, lenders typically check both your personal and business credit. This is especially true for businesses that haven’t yet developed a business credit score. However, it’s important to note that while lenders do evaluate your personal credit, they use a number of other factors (business revenue, cash flow, assets, debts, etc) when approving you for a loan. 

The Funding You Need For Your HVAC

Experienced business owners know, a business loan can help you stay on top of the stress that’s often associated with running your own business, while still working toward achieving your goals. Apply for a business loan today with Loans Canada to access: 

  • A repayment plan that’s specific to the needs of your business
  • Funding that’s received within as little as two days
  • Competitive rates 
  • An application process that is faster and more efficient than applying with a bank
Caitlin Wood Priyanka Correia Lisa Rennie Bryan Daly Cris Ravazzano Margaret Johnson Kale Havervold Liz Enriquez Sean Cooper Veronica Ott Corrina Murdoch Chrissy Kapralos

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