Buying an HVAC, plumbing, or electrical service business is one of the more financeable small-business acquisitions there is. These are cash-flowing, recurring-revenue operations with real equipment and a track record — exactly the profile SBA 7(a) lenders are set up to underwrite. Here's how the process actually works, end to end.
1. Find a business and get its SDE
Every deal starts with seller's discretionary earnings (SDE) — the true cash flow available to an owner-operator after add-backs for owner salary, personal expenses run through the business, and one-time costs. Brokers list SDE (sometimes called "cash flow") on the listing itself; it's the number everything else is built on. See our SDE multiple guide for how that figure turns into an asking price.
2. Understand the down payment
SBA 7(a) loans typically require 10–15% down from the buyer, well below the 20–25% conventional commercial lenders ask for, and far below the 25%+ down payments common in commercial real estate deals. Some of that can come from a seller note. Full breakdown in our down payment guide.
3. Check the DSCR before you get attached
Debt service coverage ratio (DSCR) is the single number that determines whether a lender will actually fund the deal — it measures whether the business's cash flow comfortably covers the loan payment. Lenders want to see it stress-tested, not just as advertised. This is the step most buyers skip until they're already in love with a listing. See our DSCR guide for the math.
4. Get pre-qualified with an SBA lender
SBA 7(a) lenders that actively originate in the trades — HVAC, plumbing, electrical — will pre-qualify you based on your financials and the target business's numbers before you make an offer. This tells you your real price range before you waste time on deals you can't close.
5. Underwrite before you call the broker
The math above — SDE multiple, DSCR as-stated and stressed — is exactly what Bizvetting runs on every listing automatically, so you can screen a batch of businesses before spending time on calls and NDAs. See graded HVAC businesses for sale →
See the math applied to real listings. Every business on Bizvetting is graded A/B/C by stressed DSCR against SBA 7(a) underwriting — free, no signup required for the grade itself.
Browse graded listings →What can go wrong
- Buying on as-stated DSCR alone. A deal that clears comfortably at the seller's stated numbers can fail once a lender applies a stress haircut to SDE.
- Underestimating total cash needed. Down payment is just the start — factor in working capital, SBA guarantee fees, and closing costs.
- Skipping quality of earnings. SDE add-backs on a listing are the seller's characterization, not an audited number. A CPA-reviewed QoE review before closing is standard practice for a reason.