Guide · Buying, expanding, opening
Buying condensers in March saves thousands in June, but March is when the cash is lowest. What funds the pre-season?
By Alex Makowski Published
Ask the distributor for 60 to 90 day terms or floor-plan financing on the unit order first; volume with one distributor is what earns it. Fund the rest — refrigerant bought at the annual low, the two to four weeks of new-tech payroll before peak revenue clears, the second van — with a working capital loan on last summer's statements, funded in one to three business days. Send twelve months so the underwriter reads July, not February.
In this guide
- 01The pre-season arithmetic
- 02The cheapest money is the distributor's
- 03Working capital for the rest, read against last summer
- 04Vans and the line
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01
The pre-season arithmetic
HVAC contractors who pre-buy units and refrigerant before Memorial Day fill more calls in July than the ones ordering job by job at full markup during a heat wave. Refrigerant bought in February or March is at its annual low; a company using $30,000 of it a year can save several thousand dollars by buying ahead. And the techs have to be hired and trained before the phones start, which means two to four weeks of payroll before peak-season revenue lands.
All of that wants cash in the first quarter, which is exactly when an HVAC company's account is at its seasonal low. The saving is real. So is the timing problem.
02
The cheapest money is the distributor's
Distributors extend net terms and, for volume buyers, floor-plan financing on equipment orders — 60 or 90 days to pay for units that will be installed and invoiced inside that window. It is the cheapest financing in the trade and it is earned with volume: consolidating purchases from three or four distributors to one or two builds the account that gets the terms. Ask the rep in January, not in May.
What your deposits support
03
Working capital for the rest, read against last summer
Refrigerant, filters and parts stock, the new hires' first month, the marketing that books the maintenance contracts: a working capital loan or a cash advance on your deposits, funded in one to three business days, amounts around half to one and a half times a month's deposits.
Which month the funder treats as typical is what decides the offer, and in March the last three months are the thinnest of the year. Send twelve. A company that deposited $120,000 in July and $40,000 in January is a seasonal business, and an application that says so — with last year's summer in the file and a sentence explaining that the money buys this summer's inventory — is priced on the summer.
04
Vans and the line
A second or third service van is an asset and finances as equipment over two to six years with the van as security, at a cost far below working capital. Two applications, two days apart, and the van gets the cheap money.
And the durable fix for a business whose cash runs opposite to its season is a line of credit applied for in August against July's statements: drawn in February for the pre-buy, repaid in July, costing nothing in between. Contractors who have one describe March as a different month.
Written by
Alex Makowski, Owner
Alex Makowski owns and runs Business Loans for America and has been placing funding for U.S. small businesses since 2021. Businesses he has worked with have secured $50M+ in financing across 1,200+ placements. He writes and reviews every guide on this site.
FAQ
Related questions.
- Will a funder see a February application as a business in trouble?
- Only if February is all it sees. Twelve months of statements and one sentence about seasonality turn the same numbers into a normal HVAC file. Three months ending in February is the window that looks like a decline.
- Should I take an advance to pay a distributor early for a discount?
- If the early-pay discount is larger than the cost of the advance over the same weeks, yes, and it sometimes is on a large unit order. Do the arithmetic in dollars, not percentages, before you sign either.
- Does a maintenance-agreement book help the application?
- A book of prepaid or monthly maintenance agreements is recurring revenue that shows up in the winter statements, and it is the single best thing an HVAC company can put in front of an underwriter in March. Send the count and the monthly value.
Guides
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Big-box account, net-90
The retailer is borrowing your cash interest-free. Price that into the deal, then fund the gap deliberately.
Sources
- U.S. Small Business Administration — LoansFederal loan programmes, eligibility and what the SBA does and does not guarantee.
- IRS Publication 946 — How to Depreciate PropertyThe Section 179 deduction and depreciation limits, from the authority that sets them.
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