Plumbing and HVAC contractors get SBA loans mostly in small amounts, with acquisitions the large exception: 3,111 7(a) loans between October 2023 and June 2026, about $1.34 billion from 356 lenders. The median loan was $152,900 at a median rate of 10.45%, and 46.2% went through SBA Express. Acquisitions are the exception: 365 loans at a median of $792,000 and a median rate of 9.75%. Lenders decide on cash flow in the tax returns, how much revenue recurs through service agreements, and whether the business depends on its owner and the owner's license.
| Measure | Plumbing, Heating, and Air-Conditioning Contractors | All industries |
|---|---|---|
| SBA 7(a) loans approved | 3,111 | 162,355 |
| Median loan | $152,900 | $150,300 |
| Middle half of loans | $60,000 – $425,000 | $50,000 – $500,000 |
| Loans of $1 million or more | 11.4% | 12.9% |
| Median rate at approval | 10.45% | 10.25% |
| Middle half of rates | 9.49% – 11.25% | 9.3% – 11.25% |
| Acquisitions (change of ownership) | 365 (11.7%) | 16,849 (10.4%) |
| Median acquisition loan | $792,000 | $693,000 |
| Lenders that made these loans | 356 | 1,648 |
| SBA 504 loans (real estate, equipment) | 273 | 16,714 |
Approvals FY2024 – FY2026 to date (1 Oct 2023 – 30 Jun 2026), cancelled loans excluded. Source: SBA 7(a) and 504 FOIA loan records, as of June 30, 2026.
- SBA 7(a) loans approved
- 3,111 (Oct 2023 – Jun 2026)
- Lenders that approved one
- 356
- Median loan
- $152,900
- Median rate at approval
- 10.45%
- Acquisitions
- 365 loans, median $792,000
- Through SBA Express
- 46.2% of loans
What SBA lenders approved for trades contractors
Plumbing, heating and air-conditioning contractors (NAICS 238220) took 3,111 SBA 7(a) loans from FY2024 through June 2026, worth $1,340,606,600, from 356 lenders. The typical loan is modest. The median of $152,900 sits almost exactly on the national median of $150,300 across all industries, and the middle half of loans ran from $60,000 to $425,000. But the top of the range is real: the top tenth started at $1,101,000, and 355 loans (11.4%) were $1 million or more.
Read together, the figures describe two different borrowers. One is an operating contractor adding a van, replacing equipment or smoothing the slow months, borrowing a small amount. The other is a buyer purchasing a whole company, borrowing several times as much against goodwill and a customer base. They use the same program and meet very different underwriting.
| Figure | Plumbing, heating and A/C | What it tells you |
|---|---|---|
| Median loan | $152,900 | In line with the national $150,300: most loans fund operations, not purchases |
| Middle half of loans | $60,000 to $425,000 | Vans, equipment and working capital at the low end; purchases and buildings at the top |
| Loans of $1 million or more | 355 (11.4%) | Where acquisitions and owner-occupied real estate sit |
| SBA Express | 46.2% of loans | Nearly half the loans were Express, which tops out at $500,000 |
| Median rate at approval | 10.45% (middle half 9.49% to 11.25%) | A little above the national 10.25%, consistent with smaller loans |
| Fixed-rate share | 15.8% | Most loans float with the base rate |
| Acquisitions | 365 loans (11.7%), median $792,000 at 9.75% | Above the national 10.4% share; buying a contractor is a much larger loan |
| Start-ups | 8.9% of loans | Lenders mostly finance established shops |
| Franchises | 6.7% of loans | A small share; most contractors borrow as independent shops |
| Median jobs supported | 5 | Small crews; the owner is often still running calls |
Express loans and acquisition loans are different animals
SBA Express loans go up to $500,000 and let the lender decide on its own credit process and forms, in exchange for a smaller SBA guaranty than a standard 7(a). That suits a contractor who needs a revolving line for materials and payroll through the shoulder season, or a term loan for two service vans. That fits the industry's figures: 46.2% of its loans went through Express.
Acquisition loans sit at the other end. The median of $792,000 is more than five times the industry median, and it priced lower, at a median of 9.75% against 10.45% overall. Part of that is SBA's rate structure: variable 7(a) rates are capped at the base rate plus 3% above $350,000, against plus 6% from $50,001 to $250,000. The cap is a ceiling, not the price, and lenders price below it when a larger, well-documented credit supports it. For current pricing, see SBA loan rates.
An operating loan is underwritten on the business you run. An acquisition loan is underwritten on the business you are buying and on whether you can run it without the seller.
What lenders look for in a plumbing or HVAC business
The coverage test comes first. SBA requires debt service coverage of at least 1.15x, and 1.0x globally once the owners' own income and debts are included; from 1 October 2026 (SOP 50 10 8.1), a change of ownership must show 1.25x on historical results. Conventional bank lenders commonly look for at least 1.25x. A contractor whose returns show cash flow of 500 a year against proposed payments of 400 covers 1.25x. Beyond the arithmetic, a trades file is read for five things.
- Recurring revenue. Maintenance and service agreements, renewed every year, are the closest thing this industry has to contracted income. Lenders want the count of active agreements and the renewal history, not just the revenue line. Repeat residential customers count for something; one-off installations count for less.
- The work mix. Residential service and replacement is paid quickly, often on the day. New-construction and commercial work runs on progress billing, retainage and general contractors who pay slowly, and it needs a work-in-progress schedule and a clean receivables aging. A shop that has drifted toward new construction will show more revenue and less cash.
- Seasonality. Heating and cooling businesses have peaks and troughs. A monthly P&L shows the lender the trough, and it shows whether the business needs a working capital line alongside any term debt. See how lenders size a working capital line.
- Licensing and the owner. In many states the business operates under one individual's master or contractor license. If that person is the owner, the lender asks what happens if they leave or retire, and in a sale the answer cannot be the seller staying on as an employee. If it is an employee, the lender asks how secure that employee is.
- Technicians and the fleet. Revenue is capped by how many trained technicians the business keeps. Lenders look at headcount stability and at the age of the vans, because an aging fleet is a capital need the cash flow will soon have to meet.
Add-backs matter in this industry because owners often run personal costs through the business: a truck used mostly off the job, a family member on payroll who does little work, above-market owner salary. Lenders will credit an add-back only when a document supports it. See EBITDA add-backs.
Buying a plumbing or HVAC company
365 of the industry's 3,111 SBA loans financed a change of ownership, 11.7% against 10.4% across all industries. Most of the purchase price in these deals is goodwill: a customer list, a phone number, a reputation and a crew. There is little hard collateral behind it, which is why SBA lenders, with a guaranty of 75% on loans above $150,000, are often the natural lender. SBA does not decline a loan solely because collateral falls short, but lenders must take the collateral available, and that often includes a lien on the buyer's home.
The structure follows SBA's acquisition rules. 7(a) maturities for a business acquisition run up to 10 years, and from 1 October 2026 (SOP 50 10 8.1) a change-of-ownership loan amortizes over no more than 10 years except the share financing real estate. For a complete change of ownership, SBA requires an equity injection of at least 10% of total project costs. A seller note can supply up to half of it only if it is on full standby, with no principal or interest payments, for the life of the SBA loan; a seller note that is not on standby is allowed, but it is debt and counts in debt service. SBA prohibits an earnout to the seller. Where the amount financed, less appraised real estate and equipment, exceeds $250,000, or buyer and seller are related, SBA requires an independent business valuation, and the loan for the purchase cannot exceed it. From 1 October 2026, financial due diligence is required on every change of ownership, and a quality of earnings report on acquisitions of $3 million or more excluding real estate. Every owner of 20% or more personally guarantees the loan. See financing an HVAC or plumbing company acquisition and seller notes and full standby.
What makes a trades acquisition financeable, beyond the numbers:
- A plan for the license: who will qualify the business after closing, and when
- Service agreements that transfer to the buyer, with the renewal history to show they will be renewed
- Key technicians and the office manager staying, ideally with retention arrangements in place
- A seller transition that fits SBA's rule: the seller may not stay on as an owner, officer or employee, but may consult for up to 12 months (24 months under SOP 50 10 8.1 from 1 October 2026), long enough to introduce the buyer to commercial accounts
- The target's latest full year of figures, never an older year, and the signed letter of intent
Larger home-services buyers, especially those buying a second or third shop, may find conventional debt fits better; see SBA 7(a) vs a conventional acquisition loan and add-on acquisition financing.
When the shop owns its building
SBA 504 financed 273 projects for plumbing and HVAC contractors in the same period, at a median of $526,000. 504 finances owner-occupied real estate and long-life equipment (for a contractor, the shop, warehouse or yard it works from), typically 50% from a bank, 40% from the CDC and 10% from the borrower, or 15% for a new business or special-purpose property and 20% for both. The business must occupy at least 51% of an existing building, or 60% of new construction. A contractor buying its building while also buying equipment or funding working capital can pair a 504 with a 7(a), and since July 2026 the two programs' limits are counted separately. See SBA 7(a) vs SBA 504.
Preparing a contractor's file
The documents are SBA's standard list:
- Business tax returns for 2–3 years, with the filing extension if the latest year is not yet filed
- P&L and balance sheet, plus a year-to-date P&L through last month-end
- Debt schedule, with copies of any notes being refinanced, including vehicle and equipment loans
- Personal tax returns (2–3 years) and a personal financial statement for each owner of 20% or more
- Owner resume, which supports Form 1919's management experience
- Business plan or use-of-proceeds narrative, and bank statements if available
A trades file is stronger with the industry's own evidence beside it: a list of active service agreements with renewal dates, a receivables aging if the business does commercial work, a work-in-progress schedule for open jobs, a fleet list, and the license the business operates under. None of these are on SBA's form. All of them answer questions an underwriter will otherwise ask.
Transparent builds that file into a full lender package — financing model, lender presentation, blind teaser and underwriting memo — in a day once the documents are in, and matches it to lenders among the 278 in its book that write SBA 7(a) and 504, and to conventional lenders where they fit the deal better. On SBA loans the lender pays Transparent, not the borrower. See the package.
Common questions
- Is SBA Express or a standard 7(a) better for a contractor?
- Express suits smaller, simpler needs: it goes up to $500,000 and is decided on the lender's own process. A standard 7(a) carries a larger SBA guaranty, which is what lets a lender finance a large, goodwill-heavy acquisition. 46.2% of SBA loans to plumbing and HVAC contractors went through Express.
- Do lenders treat service agreements as recurring revenue?
- They give them credit when the file shows the count of active agreements, what each pays, and how many renewed last year. Agreements that renew reliably make the cash flow look steadier through the seasons. Revenue described as recurring without that evidence gets little weight.
- Can I buy an HVAC or plumbing company if I am not licensed?
- Often yes, but the lender will need to see how the business keeps a qualifying license after closing, whether through a licensed employee or the buyer qualifying. In a complete change of ownership the seller cannot stay on as an owner, officer or employee to hold it; the seller may only consult, for up to 12 months (24 months under SOP 50 10 8.1 from 1 October 2026). Licensing rules differ by state, and an answer should be in the file before it goes to lenders.
- What rate do plumbing and HVAC contractors pay on SBA loans?
- The median rate at approval was 10.45%, with the middle half between 9.49% and 11.25%. Acquisition loans, which are larger, priced at a median of 9.75%. 15.8% of loans were fixed-rate.
- Can I finance service vans with an SBA loan?
- Yes. 7(a) can finance equipment with maturities up to 10 years, or 15 years if its useful life supports it. Many contractors finance vehicles with equipment lenders instead and keep SBA borrowing for working capital or a purchase; the right answer depends on the rest of the debt.