Quick answer
Air conditioning and refrigeration businesses mostly borrow to buy split system and refrigerant stock before summer, to fund service vans and recovery gear, and to bridge the 30 to 60 days commercial clients take to pay. A line of credit or stock finance suits the seasonal build-up, equipment finance suits vehicles and tools, and invoice finance suits maintenance contracts. Banks lend to established firms; non-bank lenders help when timing or paperwork doesn't fit.
Key points
- The busiest buying month is often well before the first heatwave, so the cash need peaks while revenue is still low
- Anyone buying, storing or disposing of fluorocarbon refrigerant needs a Refrigerant Trading Authorisation, and lenders funding stock may ask to see it
- Commercial refrigeration maintenance contracts give lenders steady, predictable income to lend against
- Residential install work and commercial plant work have different cash cycles and suit different finance
Most heating, ventilation, air conditioning and refrigeration businesses earn their year in a few hot months, but they spend for it much earlier. Split systems, line sets, brackets and refrigerant go onto the shelf in August and September. Technicians get hired and trained before the phones light up. Then the first 40-degree week arrives, everybody wants an install by Friday, and the business that ordered early wins the work.
That timing mismatch is the heart of borrowing in this trade. The rest is about vans, tools, and commercial customers who pay on their own schedule.
How do lenders look at HVAC and refrigeration businesses?
Generally with interest. The work requires licensed technicians, demand is driven by weather, building activity and food safety obligations, and much of the commercial side runs on repeat maintenance. Lenders do separate the business into its income streams, though, because each behaves differently.
| Income stream | What lenders see | Typical pressure point |
|---|---|---|
| Residential split and ducted installs | Strong seasonal peaks, quick payment from homeowners | Large stock outlay before summer, quiet winter months |
| Service and breakdown calls | Frequent small payments, steady deposits | After-hours labour costs, van running costs |
| Commercial refrigeration maintenance (supermarkets, cool rooms, hospitality) | Recurring contracted income, which lenders like | 30 to 60 day payment terms, parts bought up front |
| Commercial HVAC subcontracting on new builds | Large invoices, progress billing | Head contractor risk and retention held back |
An application that explains your mix in two or three lines (for example, “55% residential installs, 30% maintenance contracts, 15% service calls”) helps an assessor understand the bank statements before they start asking questions.
Why does your refrigerant licensing matter to a lender?
This is the piece general finance articles leave out. The Australian Refrigeration Council administers two separate permissions. A refrigerant handling licence covers the person doing the work. A Refrigerant Trading Authorisation (RTA) covers the business, and according to the ARC it must be held by any individual or business buying, storing or disposing of fluorocarbon refrigerant.
In practical terms, an RTA is what lets you buy gas at the wholesaler. RTA holders also have ongoing conditions, including a refrigerant risk management plan and showing their authorisation number on quotes and invoices. Should an authorisation lapse, the business can’t restock refrigerant, and that hits revenue within days.
So when a lender is funding a stock facility or a sizeable working capital loan for an HVAC business, expect questions about:
- the RTA number and its renewal date
- the handling licences of your technicians
- your electrical licence, if your team does its own electrical connections
Having these in one PDF makes the conversation shorter. It also shows you run a compliant operation, which matters to assessors because the trade is regulated.
Longer term, Australia’s HFC phase-down continues to reduce the bulk import allowance for higher-impact refrigerants, while existing equipment is not affected. For a lender, this mostly shows up as gradual changes in which systems and gases you stock, not as a risk to your business. Mentioning that your team is trained on current lower-impact refrigerants can still help.
What do air conditioning and refrigeration businesses usually borrow for?
Pre-season stock. The biggest single need for install-heavy businesses. A revolving business line of credit works well here: draw it down as stock arrives in late winter, then repay as installs are invoiced through summer. A fixed lump sum is less efficient because you’d be paying for money you no longer need by February.
Service vans and utes. Fitted vans with racking, a vacuum pump, recovery unit and cylinders on board are expensive to replace. Equipment finance or a chattel mortgage usually suits, with the vehicle as security.
Commercial contract cash flow. A refrigeration contractor that services cool rooms for a supermarket group or a hotel chain may wait weeks for payment while paying technicians weekly. Invoice finance advances a large share of approved invoices and repays when the client settles.
Growth steps. Taking on a second crew, opening a branch in a new region, or buying a competitor’s maintenance book. These are often funded with an unsecured business loan for smaller amounts or a property-secured loan for larger ones.
If summer stock is the thing keeping you awake, tell us what you need on the shelf and when. The form is a minute’s work, and a stock question costs your credit score nothing.
How does seasonality change what lenders want to see?
Lenders read bank statements month by month, and an air conditioning business looks very different in July than in January. Some things help:
- Give them a full year. Twelve months of statements shows the cycle. Three winter months alone can make a healthy business look weak.
- Show last season’s stock turning into revenue. If you bought $180k of stock last August and invoiced $420k of installs between November and February, say so. Your accounting software can produce that in a few clicks.
- Match the facility to the season. Lenders are more comfortable with a revolving limit that you clear each autumn than with a long loan that keeps growing.
- Plan the winter. Heat pump installs, maintenance contracts and commercial work smooth the quiet months. Point those out.
Our cash flow gap calculator helps estimate how much you’re likely to be carrying at the low point before the busy months pay out.
Which risks do lenders watch for in this industry?
- A mild summer. Residential install businesses can have a lean year if the weather doesn’t cooperate. Lenders like to see some maintenance or commercial income alongside installs.
- Builder concentration. Commercial HVAC subcontractors exposed to one or two head contractors carry that builder’s risk too.
- Stock that doesn’t move. Lenders may ask how quickly last season’s leftover units were sold.
- Tax arrears after a big summer. Strong summers produce large BAS bills in the following quarter. A payment plan with the ATO can usually be worked around, provided you mention it at the start.
Which documents should you prepare?
- Refrigerant Trading Authorisation and technician licences
- Business bank statements covering at least half a year, ideally a full twelve months for a seasonal trade
- Recent BAS lodgements and an ATO account statement
- Aged debtors report, especially if you hold commercial maintenance contracts
- Copies of key maintenance agreements, showing term and value
- Supplier quotes for the stock or van you plan to finance
Example: getting ready for summer in western Sydney
An illustrative scenario only. A four-technician business in Penrith earns about 60% of its revenue from residential split system installs and the rest from service work and cool room maintenance for a handful of cafes and a butcher chain.
Last year it ran out of the most popular 7 kW units in the first week of December and lost several weeks of installs waiting for restock. This year the owner wants $150k of stock on the shelf by mid-October. The bank is supportive but wants year-end accounts that are still with the accountant.
A non-bank lender works through a full year of transactions, sees last summer’s installs clearly, checks the RTA and licences, and offers a revolving limit. The business draws $120k across September and October, repays steadily from December to March, and finishes the season with the limit almost clear, ready to use again next spring. The bank remains the plan for a cheaper long-term facility once the accounts are lodged.
Ready to line up finance before the heat arrives?
Air conditioning and refrigeration owners rarely struggle for work. The hard part is paying for the season before it starts, and choosing the right facility makes that much easier.
Filling in our form is quicker than a gas-in check on a split system, about sixty seconds. Your credit report stays exactly as it is while you’re only exploring. Nobody else gets handed your enquiry, either; it isn’t shopped around every finance company in the country, so expect no flood of strangers calling while you’re up a ladder. A specialist who knows how seasonal HVAC cash flow works reads it and calls you back. Do put in your real turnover, the stock figure you’re chasing and your RTA status, since honest numbers are what let us match a sensible facility on the first go.
Frequently asked questions
Can I finance a stock order of split systems before summer?
Yes. A business line of credit or a short-term working capital loan is the usual fit, sized to the stock you need on the shelf at your peak. Some wholesalers also extend trade terms. Lenders want to see last summer's sales in your bank statements, which shows the stock will turn into cash.
Do lenders care about my ARC licence and RTA?
Many do, particularly for larger or stock-based facilities. Your refrigerant handling licence lets you legally do the work, and the trading authorisation lets your business buy refrigerant. A lapsed authorisation could stop purchases at the wholesaler, which is a direct risk to income.
How do refrigeration contractors handle slow-paying supermarket and hospitality clients?
Invoice finance is a common answer. The lender advances most of an approved invoice's value soon after you issue it and collects when the client pays. It suits commercial accounts that are reliable but slow.
Is equipment finance available for vacuum pumps, recovery units and leak detectors?
Yes, though smaller items are often bundled with a vehicle or financed through a short unsecured loan instead, since some lenders set a minimum amount for equipment finance.
Will the bank lend to my air conditioning business?
If you've traded for a couple of years with steady profits and tidy books, it's well worth asking your bank first, as banks are often the cheapest lender. If the bank declines or can't move before the season starts, non-bank lenders can assess recent bank statements and contract income instead.