Using SBA or term debt to acquire another HVAC shop – what due diligence do banks want?

When buying a competitor, banks focus on cash flow, collateral and the buyer’s experience. They expect tax returns, profit-and-loss statements and balance sheets for the target company. They also examine whether the combined business can service the new debt.

SBA lenders follow 7(a) rules: they aren’t required to take collateral for the first $50k, but they will still lean on available assets for larger loans. Banks will also want a business plan detailing how you’ll integrate operations, retain employees and grow revenue. Expect to provide a personal guarantee.

To strengthen your case, highlight recurring service revenue and a strong maintenance base. Seller financing can reduce the equity injection needed and signals confidence from the seller.