3–5x EBITDA Still Holding in HVAC & Plumbing?

searcher profile

April 14, 2025

by a searcher in Tampa, FL, USA

Banks seem to be funding Plumbing & HVAC deals at around 3–5x EBITDA — but is that still accurate in this environment? From my recent conversations: • DSCR targets land around 1.25–1.5x • Personal guarantees are still common, especially sub-$5M EV • Seller notes are often required to make the numbers work But here’s where I’m stuck: • Are banks still underwriting off LTM EBITDA, or shifting? • Are certain regions or buyer types getting more flexibility? Would love to hear from anyone actively lending or closing in this space — especially if the numbers are changing.
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Reply by a lender
from University of Southern California in Los Angeles, CA, USA
Hi ^redacted‌ - HVAC and plumbing are two of the most popular sectors for lenders over the last few years and the interest in these sectors is still extremely strong. From my recent conversations: • DSCR targets land around 1.25–1.5x - Agreed • Personal guarantees are still common, especially sub-$5M EV - Personal guarantees for SBA are mandatory for every borrower owning 20%+ • Seller notes are often required to make the numbers work - For most SBA deals, a seller unable or unwilling to provide a seller notes is increasingly looking like a redflag. Most deals have at least a 10% seller note. But here’s where I’m stuck: • Are banks still underwriting off LTM EBITDA, or shifting? - SBA lenders underwrite on the two most recent years of EBITDA with a focus on the most recent tax return. • Are certain regions or buyer types getting more flexibility? - I am seeing lenders give extremely attractive rates for borrowers buying businesses in the North East. Recently funded a HVAC business in the North East for prime###-###-#### % but for very strong deals prime + 1% is doable. Are you trying to buy a HVAC business? I’d love to help you find the right SBA lender for this deal. We work with all the major SBA lenders. The bank pay us after your loan closes, so this is a 100% free service for you. Depending on the DSCR, I think this deal might qualify for pristine pricing (7.99% fixed). You can reach me here or directly at redacted You can also click here to schedule a meeting with me: https://cal.com/ishan-jetley-3d73m8/30min. Look forward to chatting!
commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
Generally speaking we are still seeing deals get done in this space. The largest concern continues to be licensing and being sure there is a clear path to have the proper licensing post-closing. Terms have not changed but the latest wrinkle is concerns over cost increases and how that might impact revenues due to tariffs. Lenders are really digging into potential tariff impacts. So it will somewhat depend on what you are doing. Service businesses if someone needs a new system they are going to pay the price. If you are doing construction they are going to want to understand how the contracts are structured and if there are escalators in those contracts for increases in materials. Most lenders are looking at the last three years of performance with the focus on the last two, YTD, and TTM. If you would like to discuss financing in more detail you can reach me here or directly at redacted
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