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Business Loans for Plumbers & Electricians

Business Loans for Plumbing & Electrical Companies

After a few years of working for someone else, whether it was during your apprenticeship or for the years after, you might dream of owning your own business. Maybe you think you could make more money than going out on service calls where your boss takes half – or more – of the fee. Or, you have seen a gap in the marketplace and have a great idea to fill it.

Deciding to establish your own plumbing and electrical business brings a lot of challenges and a lot of opportunities. You may know everything about how to wire a new house, but you may not know much about running a business. One thing you have probably already realized is that you will need money to get your new business off the ground and keep it running.

Shield Funding understands that newly created businesses and some even well established businesses can find a need to access capital. We make it fast and easy and all it takes is a couple of clicks to get started.

What Do I Need to Qualify?

Below is a list of the requirements to get approved for business funding with our most basic program. There may be additional factors that are considered, meeting these three requirements though gives you a very high chance of having your application approved.

 How Do I Apply?

Applying has never been easier. You can either call our toll free number 24 hours 7 days a week at
 (888) 882-6117
Submit your online application by clicking apply below and entering a few basic details about your business.

Types of Business Loans Available

Starting a new business always takes capital. If you want to buy into a franchise, it can take considerable capital, as you are buying name recognition and corporate support. Starting a solo enterprise could be free to cheap if you already own the tools you will need, but unless you plan on always chasing small jobs, you will have to invest in your business to grow. Although Shield Funding only offers business loans to existing businesses, it can be a great resource a couple of months after you launch and generate some revenues.

1. Working Capital Loans

Working capital keeps a business running. It is the money you have available to pay for daily expenses such as rent or payroll. To calculate it, take the current assets on your Balance Sheet and subtract current liabilities. A positive balance indicates that you could pay all your liabilities likely to come due in the next 90 days. Most financial advisors advise having two times the amount of current liabilities available to your business.

For many small businesses, particularly in the first year of operations, cash flow is a concern. If you are waiting for payment on a job, but your subcontractors demand payment, you might not have enough cash-on-hand to pay your bills. Businesses go through lulls, and if its is slow, you will still have to cover payroll. Working capital loans help manage cash flow ups and downs.

Growing a plumbing or electrical business requires taking on additional employees. While you can pay other plumbers or electricians per job, office and support staff must be paid per your agreement. At a certain size, you may need to hire a full-time plumber to bid on and accept new work, but until those jobs have paid, you will not have the money to pay them.

Typical terms for Working capital loans are 12 to 26 months, which could help pay your first year’s expenses. Shield Funding requires that borrowers have a minimum credit score of 650 and minimum monthly revenues of $10,000. Interest rates range from 9% to 45%, and your interest rate will be based, in part, on your credit score.

2. Short-Term Business Loans

If you have a temporary cash flow problem, or substantial unexpected expense, a short term loan might be best for meeting your needs. Learning the ropes of a new business has a certain amount of trial and error. If you incorrectly estimated the cost of materials on a job, the deposit you collected might not cover those upfront expenses. Taking out a short term loan to pay for them allows you to complete the work and receive the final payment.

A short term loan has the same costs for banks as a long-term loan, but because they make more money off long-term loans, they are reluctant to lend for short terms. Alternative lenders offer short term business loans at higher interest rates than a bank, 9% to 45%, but with terms of just six to twenty-four months. If you have good credit, your interest rate could be less than a business credit card.

Shield Funding requires one year of business history to apply for a short term loan, and a credit score of at least 650. Minimum monthly revenues must exceed $10,000, but you can borrow as little as $15,000, and there are no prepayment penalties. If you know that you can pay off the loan quickly, a short term loan could keep your business on track.

3. Bad Credit Business Loans

Alternative lenders offer bad credit business loans to borrowers who cannot or do not want to borrow from a traditional lender. Bad credit business loans make capital available to borrowers who cannot get approved for a loan at a bank. While your credit score could disqualify you for bank financing, other factors could also lead to a loan application’s rejection.

Banks reject about the same number as loan applications as they approve. They typically require that applicants have two years of tax returns, their business must produce strong revenues, and they have to show consistent growth. The loan application and approval process can take months, which is frustrating for newer business owners with immediate needs.

Alternative lenders can approve a loan application within 24 hours and disburse funds in as little as a week. As long as you have monthly revenues above $8,000 and a credit score above 500, you can qualify for financing with an alternative lender. Shield Funding gives borrowers loans in amounts ranging from $5,000 to $1 million, at rates of 12% to 45%, for terms of two to eighteen months.

Financial Tips for Growing a Contractor Business

Once you are open for business, growth becomes a priority. After the thrill of the first customer, you have to keep bringing in work. If you bought an existing business, you would likely want to make changes to make it “yours.” Take a look at the tips below and determine which will best help your plumbing and electrical company grow.

State of the Industry

The plumbing industry has an estimated worth of $105 billion, which grew 4% between 2011 to 2016. It is a slow growth industry that took a hit during the housing crisis of 2008 and has slowly been recovering. If your plumbing business includes fixture sales, the global market for plumbing fixture sales was $75 million in 2016 and will reach $1.12 billion by 2023. Demand for plumbers is expected to increase by 12% by 2024.

Small, local businesses dominate the plumbing industry, which is not surprising as many people rely upon word-of-mouth to find a good plumber. There are 116,000 plumbing companies in the United States, and over 60% of them only employ one to four people. Only 1% of those companies have more than 100 employees.

One study of electrical contracting firms found similarities to plumbing companies. Firms with revenues under $250,000 a year make up 43% of the industry. Of those employed in the industry, 71% work at companies with less than nine employees, and 68% of firms only operate in one state. The industry favors smaller local businesses.

The workforce for electrical companies has been steadily aging and retiring, so 22% of these companies added employees in 2018. If you have been thinking of starting your own firm, you could purchase a company from a retiring electrician instead. Of those who responded to one survey, 77% of them owned their companies, and they had an average age of sixty years old. As they approach retirement, selling could be their exit strategy. The U.S. Bureau of Labor Statistics predicts that demand for skilled electricians will increase by 10% by 2028.

Both plumbing and electrical contractors can count on a steadily improving market and revenue growth. The impact of retirements will create opportunities for savvy entrepreneurs and investors.


If you have been working as a plumber or electrician already, you will already have your licenses and certifications. If not, requirements vary by state, but you will likely have to complete an extensive apprenticeship and take several exams before becoming a licensed plumber or electrician. There are also licenses involved in starting a new business, and you will have to engage a lawyer to set up your legal entity.

To work as a plumber, you will need a basic set of tools, pipes, and fittings. If you are starting small, you can buy necessary supplies as needed and invoice the customer. Once you grow, however, you might want to invest in a fully-stocked van. It will save you time, and increase your profit margins if you do not have to make multiple trips to a hardware store.  Electricians will incur much the same costs, including a vehicle and equipment, when starting their business.

Business insurance is a must when working in the trades. It protects you from lawsuits if a customer is unsatisfied with your work, takes care of you or employees if injured, and covers your vehicle and equipment from loss, damage, or theft.

If you decide to operate out of your home and launch your business as a solo contractor, you will incur minimal start-up expenses.

Find a Niche

If there is significant competition in your town, you might want to specialize. Becoming known for doing one thing, and going it well, can help you build your business by becoming the person everyone calls for that service.

There are pros and cons to each specialty that a plumber or electrician can select. If you decide to focus on new installations, you should pay close attention to the local housing market and new housing starts in your area.  Existing electrical companies drive 33% of their revenues from new construction, so it is still a viable market segment.

The average age of the pipes in American households is 47 years old, which means that current homeowners are contending with deteriorating plumbing systems. You could build a strong business repairing and replacing existing plumbing. Electrical companies make more of their revenue, 44%, from maintenance and repair. If a specific type of pipe, or wiring, was commonly used in your city and is now at the point where it needs repairs, building expertise in working with it could build your business.

Other areas where a plumber could find a niche include building sprinkler system installation, mechanical services, commercial plumbing for businesses and corporations, steamfitting and piping services, and lawn sprinkler installation. Electricians could decide to work with homeowners or corporations, subcontract with local colleges, or specialize in lighting installation.

When deciding whether to generalize or specialize, consider current and long-term opportunities, the local competition and if there is a market need.

Sell Maintenance/Service Contracts

Maintenance and service contracts are becoming increasingly popular. Revenues from these contracts grew 8.3% in 2018 for electricians. Some homeowners prefer to pay a flat, monthly fee for guaranteed service on small repairs than risk a surprise repair.

The advantage to business owners is that contracts generate a predictable monthly income. If you can sign enough clients to these contracts, you could count on covering your fixed expenses each month. The disadvantage is that you must have flexibility in your schedule to respond to requests quickly. It is also a good idea to clearly layout which services the contracts do and do not cover, as performing additional repairs could eat into your profit margin.

Build Word-of-Mouth

Reputation is everything for small, local businesses. One satisfied customer can generate referrals and repeat business, but if one unhappy customer leaves a poor review on Yelp, you could be answering questions related to it for years. Take proactive steps to build word-of-mouth as part of your growth strategy.

Solicit testimonials after completing a job, and ask customers to leave positive reviews online. Be sure to get permission to use these glowing comments on your brochures or website. Ask if you can put a yard sign in the homeowner’s front yard advertising your services. Many contractors offer discounts on their work to homeowners willing to allow their front yard to be used as advertising. Front yard signs also encourage neighbors to ask about the work they had done and can lead to referrals.

Thank your customers for their referrals, either with a handwritten thank you note or by offering a discount on future work. This builds goodwill, strengthens your relationship with them, and also shows your gratitude.

Market your Business

The first stage of your customer’s journey is awareness, both awareness that they need something fixed and awareness of your business. Marketing activities raise awareness that you exist.

When a new homeowner moves into your area, send a postcard introducing your services. Utilize social media to keep clients informed of specials or discounts. Pay a graphic designer to create a killer logo and branding for your business, and then have fridge magnets printed up. If your number is on their fridge when the sink breaks or the dishwasher overflows, you are the plumber they will call.

If you decide to pay per leads through websites such as Google’s local service ads, carefully track your return on investment. Pay-per-click advertising and paid leads can generate and build your business, but if you face stiff competition, the cost may outweigh the benefit. Setting up profiles on online sites such as Houzz or HomeAdvisor can pay off when it brings in new clients. Keep the information updated and current, and include photos and testimonials from past work.

Marketing builds on word-of-mouth to keep your business at the front of possible customer’s minds. If it is not something you do well, hire someone, and outsource.

Hire Employees

Starting one with one of you can get your business off the ground cheaply, but it will not lead to long-term growth. There are only so many hours in a day to field phone calls, schedule appointments, bid for work, purchase supplies, and go on service calls.

When writing your business plan, identify at what point you will need to hire another plumber or electrician. When will you need office staff, if only part-time? For that matter, when will you need to rent office space? Setting sales goals which trigger hiring decisions can help you know when it is time to start interviewing.

In a business built on specific skills and an hourly rate, your growth options will always involve hiring more employees. Often, you could have to hire ahead of growth and cover payroll from savings or with a loan before the new employee begins generating revenue or saving you money.

Invest in a Professional Website

A professional website can do so much more than advertise your business. While it should contain the basics, your phone number and other contact information, services provided, and office hours, a well-designed website can create cost efficiencies.

Setting up a payment portal on your website allows customers to log on and pay their bill using a credit card. It saves you money and time because you do not have to pay a staff member to call and collect payments. It can also cut down on your past-due receivables.

Look into integrating a calendar app with your website, one where customers can book routine appointments such as snaking a drain. This could increase your non-emergency business. You could also use a private calendar app to help employees out in trucks manage their jobs.

A website can both promote your business and make it easier to run.

Form Partnerships with Other Businesses

Becoming a preferred provider to a local business can lead to steady, regular income. Research local property management companies to gauge their needs. While some buildings keep plumbers and electricians on staff, smaller companies often have a list of preferred providers that they call out for jobs. If a large property management company does not have people on staff, talk to them about forming a partnership, signing a year-long contract to provide exclusive services, or just how you could work with them.

If your goal is to bring in more work on new construction houses or large buildings, reach out to local builders. Subcontracting with a construction company or contractor can help you grow this revenue stream, or provide more reliable income as larger building projects can last for months or years.

To become a preferred provider, or land any larger contracts, plan on discounting your services or offering incentives. Calculate your profit margins on the jobs to ensure they are still worthwhile, and factor this is when preparing bids.

Always Know your Profit Margins

The difference between the cost to perform a job and the amount you charge for it is your profit margin. Every business owner should both know their margins, set goals and minimums for their margins, and refuse work that does not meet those criteria.

When calculating your profit margins on a job, do not forget to include a portion of your fixed expenses. Allocate expenses such as rent, electrical, and staff to each job one of your electricians takes. This will give you a more accurate idea of its profitability.

Standard variable costs will be the number of hours worked or miles driven. Over time, tracking the average hours on each type of job, the supplies needed, and your fixed costs will help you refine pricing and identify which work has the highest profit margins. Then, you can devote time and resources to bringing in more higher-value jobs.

The Final Word on Business Loans for Plumbing and Electrical Companies

Starting or acquiring a new business is an exciting time, and you will have a lot on your plate. If you need to access capital, choose a lender who is easy to work with and understands your business’ needs. Shield Funding has been offering small business loans for over ten years, and they want to see their borrowers succeed. Reach out today to find out how Shield can help your business succeed.