A Lenders Preference For Businesses To Buy
Tweet · Apr 25, 2024
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📞 Had a call with a lender the other day.
Here’s their take on HVAC, Plumbing and Landscaping businesses.
Preferences: HVAC and Plumbing over landscaping.
They have teams focused on nothing but each of those business types.
Issues with landscaping (in their minds) ✔️ Smaller landscaping businesses are pretty difficult to loan for. Basically just a client list.
✔️ Ideal: 50+ employees with contracts and systems
✔️ Not ideal: less than 50 employees, all residential/ seasonal.
HVAC/ Plumbing/ Home services Things to think about:
✔️ Focused on more home repair as opposed to new res. construction
✔️ Construction for new residential are tied to housing market
✔️ Check whether an owner needs to be licensed. Some states require that
Things they look at for UW: - Historic profitability - Enough profit to cover payments to owners
➡️ 1.25 DSCR - HVAC
➡️ Outside of HVAC - 1.5 DSCR