Financing growth: SBA loans and equipment financing

Start with what you are financing

The most expensive financing mistake is using the wrong kind of money for the need. A home service company typically borrows for four things: vehicles and equipment, seasonal working capital, growth projects such as a new location or service line, and buying another company or a building. Each has a natural match.

• Trucks, vans, trailers and major tools: equipment loans or leases, ideally with a term no longer than the asset's useful life.
• Seasonal swings in cash: a revolving line of credit, drawn in the ramp-up and repaid in the peak.
• Growth projects: a term loan, often SBA-backed, sized to the project and repaid from the extra profit it creates.
• Acquisitions and real estate: SBA 7(a) or 504 loans or conventional commercial loans with longer terms.

Small firms use a mix. Among applicants for loans, lines of credit or cash advances in the 2025 Small Business Credit Survey, 43% applied for a business line of credit, 32% for a business loan, 20% for an SBA loan or line of credit and 12% for an auto or equipment loan^[2].

SBA loan options

The Small Business Administration does not usually lend directly. It guarantees part of a loan made by a bank or other approved lender, which makes the lender more willing to say yes, often with longer terms than a conventional loan. The main options:

Standard 7(a) loans go up to $5 million with a 75% guaranty and a listed turnaround of 5 to 10 business days; 7(a) Small loans go up to $350,000; SBA Express loans go up to $500,000 with a 50% guaranty^[1]. The 504 program funds major fixed assets, including long-term machinery and equipment with a remaining useful life of at least 10 years, with a maximum loan of $5.5 million^[3]. For most service companies, 504 makes sense for a building or a large equipment purchase rather than vans.

Equipment loans, leases and other options

• Equipment loans: the asset secures the loan, which often means faster approval and less paperwork than a general business loan. You own the truck from day one.
• Leases: lower or no down payment and predictable payments; at the end you return, renew or buy. Read the end-of-lease terms and mileage limits carefully for service vans.
• Manufacturer and dealer financing: promotional rates on vehicles or equipment can be good value; compare the total cost with a bank loan, including any price you give up to get the rate.
• Bank lines of credit: best for seasonal working capital. Many lenders expect the line to be paid down to zero for part of each year.
• Business credit cards: useful for small purchases and timing, expensive if balances roll over.
• Merchant cash advances and daily-repayment products: fast but usually very expensive. Use only with a clear understanding of the true annual cost and a short, certain need.

Ask every lender for the total cost: interest, fees, any prepayment penalty and what happens if you miss a payment. Compare options on total cost and on how the payment fits your cash flow in the slow season, not on the headline rate alone.

What lenders ask for

1. Two to three years of business tax returns and personal returns for owners above the lender's ownership threshold.
2. Year-to-date profit and loss statement and balance sheet, plus the same period last year.
3. An accounts receivable and accounts payable aging.
4. A debt schedule listing every loan, lease and line with balance, payment and maturity.
5. For a project: a short plan with costs, expected revenue and a cash flow projection showing the payment can be met.
6. Bank statements, usually for the last few months.
7. Business licenses, insurance certificates and, for an acquisition, the purchase agreement and the target's financials.
8. A personal financial statement and, for SBA loans, the SBA's own forms.

Clean books shorten every step of this list. If your monthly close is current and your statements reconcile, most of it can be produced in an afternoon. Our guide to bookkeeping for contractors explains how to get there.

How approval looks from the lender's side

Approval is far from automatic. Among applicants for loans, lines of credit or cash advances in the 2025 survey, 52% were fully approved, and applicants to small banks were more likely to be fully approved, at 57%, than those applying to other lenders^[2]. Approval rates also rose with firm size and age.

Lenders look for a few things above all: profit after a market salary for the owner, enough cash flow to cover all debt payments with room to spare, steady or growing revenue, low dependence on one customer and an owner with a reasonable personal credit history. They also look at how you handle rising costs. Average hourly earnings at specialty trade contractors rose 4.7% in the year to September 2026^[4]; a business that has raised its prices in step will show steadier margins, which is what a credit officer wants to see. Our annual pricing review guide covers how.

Example: financing three new service vans

Example (fictional): a plumbing and HVAC company wants three new upfitted service vans at $72,000 each, $216,000 in total, to add two techs and replace one high-mileage van. The owner compares three options.

• Example option A, bank equipment loan: 10% down ($21,600), five-year term, the vans as collateral. The company owns the vans and keeps any resale value.
• Example option B, lease: little or nothing down, a fixed monthly payment over four years, mileage limits and a buyout option at the end. Payments are lower in the first years, but the company owns nothing unless it buys out.
• Example option C, SBA 7(a) loan: bundles the vans with working capital for hiring and training, with a longer term and lower monthly payment, but more paperwork and a longer process.

Example decision: the owner's 13-week cash flow forecast shows the company can carry the equipment loan payments even in the slow months, and the vans will be kept for at least seven years, so option A has the lowest total cost. The company opens a separate line of credit for the hiring ramp rather than stretching the van loan to cover it.

Steps to take before applying

1. 01

   Define the need and the payback

   Write down what you are buying, what it will produce and how the payment will be met. A van that adds a tech should show the extra revenue and gross profit that tech will generate.

2. 02

   Check your capacity to borrow

   Add the new payment to your existing debt payments and compare with cash flow in your slowest quarter, not your best.

3. 03

   Clean up the books

   Close the latest month, reconcile accounts and prepare the documents listed above.

4. 04

   Talk to your current bank first

   Existing relationships often bring faster decisions. Then compare with at least one other lender, including a small bank or credit union and an SBA lender.

5. 05

   Compare total cost and terms

   Interest, fees, prepayment terms, collateral and personal guarantees, side by side.

6. 06

   Plan the slow season

   Make sure the payment schedule fits your seasonal pattern, or negotiate seasonal payments where the lender allows it.

Financing also affects your customers. If you collect payments by card, the cost of processing is part of the cash you have to service debt; see our guide to credit card processing fees. Paying techs correctly on a growing payroll matters too, and our guide to payroll for field teams covers mixed pay plans. Lenders who see quick invoicing and collection, including text-to-pay and online invoices, see a business that turns work into cash reliably.