Two Slow Seasons and the Business Is Already Gone

HVAC companies exist at the mercy of temperature. The July emergency call, the August air conditioning failure in a building with twenty tenants, the January furnace that stops before dawn: these are the moments that generate revenue, and they cluster in summer and winter with extended shoulder periods in between. An MCA signed in July, when the service calls are stacking and the technicians are logging twelve-hour days, reflects a revenue rate that does not survive September.

The funder who originates the advance in peak season prices it against peak revenue. The business that must service that debt through October and November is servicing a debt whose terms were set at the high-water mark of the year, and the account that looked flush in August is running thin by Thanksgiving.

Issue One: The Spring Shoulder and the Fall Shoulder, Both at Once

HVAC seasonality is not one dip. It is two. Spring, when heating season has ended and cooling season has not begun, produces a lull that can run six to eight weeks. Fall, when cooling demand fades and heating season has not accelerated, produces another. An HVAC company that signed an MCA in February during a cold snap and another in August during a heat wave may be carrying two remittances through both shoulder periods simultaneously. The math is not recoverable without intervention.

Issue Two: Technician Retention and Payroll Priority

Experienced HVAC technicians are not interchangeable. Certification requirements under EPA Section 608 for refrigerant handling, combined with state licensing in most jurisdictions, mean that a technician who leaves because a payroll was short does not get replaced within two weeks. The owner who must choose between the daily MCA remittance and a technician’s paycheck will sometimes make the wrong choice, or will make the right choice and default on the MCA, triggering acceleration and an enforcement response that creates a worse problem than the payroll shortfall would have.

The technician takes the next offer the same afternoon the check bounces. The business does not recover for a full season.

Issue Three: Maintenance Contract Revenue and MCA Sizing

Many HVAC companies sell annual maintenance contracts that provide recurring income independent of seasonal emergency calls. That revenue stream, when included in the processor or bank account data that MCA funders use for underwriting, inflates the apparent revenue base and produces a larger advance than the truly variable portion of the business justifies. The maintenance contract revenue is real, but it arrives monthly or quarterly. The MCA remittance is daily. An owner who represented total revenue to obtain a larger advance may find that the daily withdrawal rate was calibrated against annual contract income that does not flow on a daily basis.

Issue Four: Inventory Carrying Costs and Lien Complications

HVAC inventory, compressors, air handlers, refrigerant, control boards, is expensive and technically specialized. A blanket UCC lien that covers inventory creates complications when the business needs to pledge that inventory to obtain supply credit from distributors. Some HVAC distributors extend net-30 or net-60 terms as a matter of course, but only to contractors whose accounts receivable and inventory are not already encumbered. An MCA funder’s blanket lien may convert a supply relationship from net terms to cash on delivery, which changes the working capital dynamics of every job the company runs for the rest of the contract period.

Issue Five: The Emergency Call That Arrives During a Frozen Account

The nightmare scenario for an HVAC owner is not abstract. An emergency service call that requires a compressor or a control board that the company does not carry in inventory, during a period when the bank account has been frozen by a confession of judgment, means the owner cannot purchase the part, cannot complete the job, and may lose the service contract that the emergency call was part of. The frozen account does not care that January is the busiest month. The MCA funder’s collection mechanism does not pause for a heat emergency.

One owner described it as trying to fight the fire while someone has turned off the water main. That is not a metaphor he found amusing.

Issue Six: Financing Options That Close After Default

HVAC equipment financing, vehicle financing for service vans, and working capital lines of credit are all less accessible after an MCA default produces a judgment or a UCC lien that appears in a business credit search. The SBA loan program, as of June 2025, no longer permits refinancing MCA debt, which removes what was for many HVAC owners the most accessible conventional alternative. The window for refinancing out of an MCA before default narrows over time, and the credit profile degradation after a default makes conventional alternatives more expensive or unavailable entirely.

Issue Seven: Reconciliation Rights Most Owners Do Not Claim

HVAC companies whose MCA agreements contain genuine reconciliation clauses, and not all do, have a contractual right to demand that the daily remittance be adjusted downward to reflect actual receivables volume during the slow season. That right requires formal invocation, documentation, and in most cases a battle with the funder who will resist any adjustment that reduces their return. An attorney who understands MCA contract language can identify whether the right exists, invoke it in writing, and create a record that protects the owner if the funder later claims default for the reduced remittances.

Many HVAC owners have that right and have never exercised it because they did not know it was there. A consultation with an MCA defense attorney is where that analysis happens, and it costs nothing to begin.

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