Business Line of Credit for HVAC and Plumbing Contractors
A business line of credit lets an HVAC or plumbing contractor buy equipment for an install, cover payroll while a commercial customer pays on net terms and carry the shop through a mild spring, all from one limit with interest only on what's out. It's the cheapest recurring tool for the trades, but it takes some history and clean books.
Common draws for contractors
Materials before the job pays
Draw to buy the condenser or water heater, install it and repay when the homeowner or the financing company pays.
Net-terms commercial work
General contractors and property managers often pay in thirty days or more, and some hold back retainage. A draw covers wages until the check arrives.
A mild shoulder season
When spring stays cool and calls slow, a draw keeps technicians paid until demand returns.
Covering a slow month with the line
A $54,000 line at 1.75% a month backs an HVAC or plumbing contractor with $120,000 in deposits; the $22,800 drawn for a slow month comes back in three parts.
| Step | Balance on the line | Cost that month at 1.75% |
|---|---|---|
| Draw in the slow month | $22,800 | $399 |
| After one repayment | $15,200 | $266 |
| After two repayments | $7,600 | $133 |
| Paid back | $0 | $0 |
Roughly $800 in interest, then the full limit is available again. With a 4.2-point yearly range in BLS employment for plumbing, heating and air-conditioning contractors (NAICS 238220), the slow month to test is the one on your statements.
What line funders want to see
- Two years of tax returns and current financials.
- An accounts receivable aging report, including retainage.
- Several months of bank statements showing service revenue.
- Owner credit above the funder's minimum.
Line versus truck and equipment financing
Service vans, excavators for sewer work and shop equipment are better financed with loans that match their lifespan. The line is for working capital that turns over in weeks or months.
Using the line without outgrowing it
Match each draw to a job or a season and repay it when that money arrives. Funders review usage, and a balance that stays near the limit reads as a shortfall. A contractor whose line goes to zero between jobs usually gets the limit raised at renewal.
Retainage and the line
When a commercial customer holds back part of each progress payment until closeout, that money is earned but not in the bank. A draw bridges it, and closeout pays the draw back. Keep a list of retainage owed so the funder can see it.
Quick answers
Can an HVAC or plumbing contractor get a business line of credit?
Yes, with a couple of years in business, steady service revenue, clean financials and owner credit above the funder's minimum. Funders often ask for an aging report that includes retainage. Heavy daily advance debits usually need to come down first.
How should a contractor use a line of credit for materials?
Draw for the equipment and materials on a job, complete the install and repay the draw when the customer or financing company pays. Matching each draw to a job keeps the balance low and makes the line easy to renew.
Is a line of credit or an advance better for an HVAC company?
For recurring gaps like materials and net-terms commercial work, a line costs less because interest runs only on the balance. An advance fits emergencies or contractors who don't meet a line's requirements, like a young shop with limited history.
More for HVAC and plumbing contractors
- Same-day merchant cash advance for HVAC and plumbing contractors
- Second position MCA for HVAC and plumbing contractors
- MCA consolidation for HVAC and plumbing contractors
- Revenue-based financing for HVAC and plumbing contractors
- How funders read HVAC and plumbing contractors
- Business line of credit: how it works
Run your own numbers with the MCA APR calculator.
Want to see what fits an HVAC or plumbing contractor like yours?
Tell us your slow months and your open advances, and we'll shop the file with funders whose programs fit. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.