SBA Loans for Landscaping Companies

SBA landscaping loans by the numbers

From FY2015 through June 30, 2026, the SBA approved 9,930 landscaping loans under 7(a) and 708 under 504, net of cancellations.^[1] Most are small lines and equipment loans. Purchases of a whole company look very different.

So few long terms point to purchases made of contracts, trucks and mowers, with the yard leased. The March peak is the spring ramp: owners borrow just before the season starts. The charge-off rates belong together. Small landscaping loans did better than average, and large ones did worse.

Three ways into a company

• Purchasing a company from the outside is an Initial Acquisition. At least 10% down that can't be waived, and the seller's history must show 1.25 coverage.^[2]
• Purchasing the company you run, after 24 months or more on the payroll, from a single owner selling 100% of the stock, is an Owner Buyout. Same 1.25 floor, different equity rules.
• Adding a second company, such as a snow plowing company, can qualify as a Business Expansion at a 1.15 floor if your company purchases 100% of its stock and both sit in the same four-digit industry group.

The size limit for landscaping services is $9.5 million in average annual receipts, and in a purchase the company you purchase is counted together with yours.^[3] Every owner and SBA-required guarantor must be a U.S. citizen or national whose principal residence is in the U.S. That rule covers ownership, not your crews.

Seasonal cash flow and the coverage test

Landscaping follows the weather. In the 2022 Economic Census, first-quarter payroll was only 18.6% of the year's payroll at landscaping companies, and payroll overall was 32.3% of receipts.^[4] Federal wage records show industry employment at 745,595 in January 2025 and 1,009,244 in June.^[5] Snow removal was 2.8% of industry receipts, but 14.4% of establishments did some of it.

A lender doesn't lower the bar for a seasonal business. It reads the whole year, and the SOP gives it two tools that suit this industry.

• Last year or a two-year average. Coverage on a purchase is measured on the last fiscal year or an average of the last two, on historical or adjusted results. After a mild winter, the average can carry a snow company that the last year alone would strain.
• Same months, last year. The lender must compare the latest interim statement with the same period a year earlier, for your company and for the one you purchase. A thin February is judged against last February, not against July.
• No projections. A plan to add routes or raise prices after closing doesn't count toward the 1.25 floor. The company has to have earned it already.

Level payments all year

The SOP has no skip-payment or seasonal installment rule for a 7(a) term loan, so expect the same payment in February as in July. The SBA allows an interest-only period if your lender offers one, and coverage is still tested on a fully amortizing payment. A coverage ratio of 1.48 means the year works. It doesn't mean March works, so plan the winter cash month by month before the lender does.

Trucks, mowers and contracts as collateral

In the book's main example, Holly Brandt, a facilities manager who spent 14 years hiring landscaping contractors, purchases a commercial maintenance and snow company with seven crews and nine trucks for $1,200,000. Her new company purchases the assets, and the yard is leased. Of the price, $700,000 is contracts, the customer list and the name, $480,000 is trucks, trailers, mowers and a skid steer, and $20,000 is inventory.

The loan can pay for the contracts, but they earn nothing toward the SBA's fully secured test, which counts only fixed assets. Used equipment counts at no more than 50% of net book value, or 80% with an orderly liquidation appraisal. Holly's seller expensed most of the fleet, so its book value is only $90,000. Any value above book needs an independent appraisal, and hers came in at $300,000.

The SBA doesn't require a lien on a vehicle that already has one or is worth $20,000 or less. A vehicle without a lien earns no credit, though, so Holly's lender liens every truck and trailer to count the full appraisal. In a purchase, the lender must also take a lien on receivables and inventory, counted at 10% of book.

The shortfall

A $973,000 gap is normal for a service company whose value is relationships. When the loan isn't fully secured, the lender must take available equity in personal real estate the owner holds alone, unless the equity is under 25% of the property's value, and must consider real estate held jointly with a spouse. Holly's lender takes a lien on the equity in her home. On a Standard 7(a) loan that isn't fully secured, the SBA also requires life insurance in the amount of the shortfall when the business depends on one owner, and her lender decides how that applies to her structure. A shortfall alone is not a reason to decline the loan. Hazard insurance is required on pledged collateral for 7(a) loans over $50,000, and that includes the fleet.

The seller, the crews and the licenses

In many small landscaping companies, the owner holds the key customer relationships and the license. Lenders look hard at what leaves with the seller. Three SBA rules shape the handoff.

• The seller leaves, or consults. In an Initial Acquisition or a Business Expansion, the seller may not stay as an officer, director, stockholder or employee, but may consult for up to 24 months in total. Holly's seller consults for 6 months.
• A buyer rebate is allowed. An earnout is not. A price that grows if contracts renew is an earnout, and the SBA prohibits it. Holly's protection is a buyer rebate: if key contracts don't renew, the seller pays money back, and it goes to her loan principal. The $45,000 of snow contracts customers prepaid is settled separately, in the working-capital true-up at closing.
• Licenses within 90 days. The lender must have evidence of every license the business needs within 90 days after the loan finishes funding.

Holly's seller is the company's only certified pesticide applicator, and he leaves at closing. Federal certification applies only to restricted use pesticides, in the ornamental and turf category, and a noncertified applicator may use them only under a certified applicator's direct supervision.^[6] Everything else about pesticide and contractor licensing is state law, and the certification belongs to the person, not the trucks. Your state decides what it takes. Line up who will hold every license before you sign.

Down payment and seller notes on a purchase

For a first-time owner, the SBA minimum is 10% of total project cost, and it can't be reduced or waived. A seller note counts toward it only on full standby, meaning no principal or interest for the life of the SBA loan, and limited sources like that can cover no more than half of the required injection. A temporary exception for veterans: from November 11, 2026 through September 30, 2027, the SBA has announced that an eligible veteran purchasing an existing business with a 7(a) loan may raise the full 10% from these sources (SBA News Release 26-117); ask your lender how it applies.

Holly needed $135,000. She put in $75,000 of her own cash, and the seller carried $60,000 on full standby for the whole 10-year term, under the half cap of $67,500. Many lenders ask for more than the minimum. Total debt, including any seller note that isn't on full standby, can't exceed the business valuation, and her independent valuation came in at $1,240,000, above the price.

Holly's deal, start to finish

Every number below comes from the book's worked example. The interest rate is illustrative.

Had the seller's owned yard and shop, appraised at $450,000, been part of the purchase, the project would have been $1,800,000 and the loan $1,620,000. The real estate share can run up to 25 years and everything else is limited to 10, weighted and rounded, which comes to 14 years.

Purchasing the company you run

Owen Mercer has been crew foreman and operations lead at a residential lawn care and tree company for seven years, on the W-2 payroll all year, winters included. The founder owns the whole company and offers it to him for $500,000. Because a single owner is selling 100% of the stock to someone employed there at least 24 months, the SBA treats it as an Owner Buyout, and Owen and the company are Co-Borrowers.

On the stock path, Owen puts in $30,000 of cash and the seller carries $20,000 on full standby. He borrows $450,000 over 10 years. The company's documented cash flow of $112,000, after a market salary, covers $64,099 of annual debt service 1.75 times, and his household test comes to 1.50. The upfront guaranty fee is $10,125.

If his lender had waived the equity, the loan would have been $500,000, with $71,221 of debt service and coverage of 1.57, and no dedicated working capital could go into this or any other 7(a) term loan for 90 days. At $450,000, the loan could also have been made under SBA Express with a 50% guaranty, and the change-of-ownership equity rules still apply there. His lender chose a standard 7(a) loan at 75%.

Two questions on this route are the lender's to answer. The SOP's general Owner Buyout rule says an original owner stays and guarantees unless otherwise outlined, so Owen's lender confirms in writing that the founder can retire at closing. And many foremen are laid off each winter and rehired in spring. The SOP doesn't say whether those months count as employed, so ask your lender how it counts your time at the first meeting. The founder is also the only certified pesticide applicator, so Owen gets his own certification before closing.

Adding a snow company: the Business Expansion

Kristen Dahl has owned her landscaping company for nine years, and every winter most of her trucks sit in the yard. Her company purchases 100% of the stock of a snow-plowing-only company with 11 plow trucks for $600,000. Landscaping (561730) and snow-only plowing (561790) are both in industry group 5617, so the deal can be a Business Expansion at a 1.15 floor. The snow company keeps operating on its own, so the two companies are Co-Borrowers, and the deal keeps the same number of personal guarantors.

Her lender could have reduced or waived her equity on an expansion. She put in the full 10%. On the new loan alone, 1.15 coverage takes $91,405 of cash flow and 1.25 takes $99,353, a gap of $7,948. On a tighter deal, that gap can decide the loan.

Two choices would have made it an Initial Acquisition, at 1.25 with equity that can't be waived: purchasing the snow company's assets instead of its stock, or purchasing a sprinkler installer (238220) or paver contractor (238990), which sit outside group 5617 even though many landscapers do that work. Your lender documents the category, so confirm the target's code before you make an offer.

The Seasonal CAPLine for the spring ramp

No SBA line of credit can pay for a company purchase. A Seasonal CAPLine has a different job: the spring build-up, when cash goes out for mulch, plants, fuel and returning crews weeks before the first invoices are paid. The February after her purchase closes, Kristen's company opens one.

The rules are strict. The company needs at least 12 months in operation and a definite pattern of seasonal activity, shown month by month, plus a 12-month cash flow projection. The money may pay only for the seasonal increase in receivables and inventory, or in some cases the labor that goes with it. It can't keep the business going through the slow months or refinance debt. Draws come during the build-up, principal is repaid as the seasonal cash arrives, and the balance must reach zero for a 30-day clean-up period. Drawing in the fall to keep crews on payroll is the wrong tool for the job.

The yard, fuel tanks and 504

An SBA environmental review applies only when real estate or a leasehold is pledged. Landscaping isn't on the SBA's list of environmentally sensitive industries, so a pledged yard with no listed prior use starts with an Environmental Questionnaire, plus a Records Search with Risk Assessment on a loan over $250,000. The SOP calls for a Phase I whenever a business sells, supplies or dispenses fuel. Many yards have a tank for the company's own trucks, and whether that counts is your lender's call, so raise it before anyone orders reports.

A landscaping yard or shop appears on none of the SBA's Special Purpose lists, and the lender or CDC decides how to treat a given property. Purchasing a yard through a 504 can work for an established company, but goodwill and receivables can't go in a 504, and equipment in one needs a 10-year useful life, which most mowers and trucks won't have.

On fees, the FY2027 0% upfront 7(a) fee reaches a landscaping company only if the loan is $700,000 or less and the company is in a rural county. Landscaping isn't one of the listed fee-waiver industries, and none of the book's three companies is rural, so all three pay the standard rates.

Related guides

• SBA HVAC and Plumbing Business Loans
• SBA Collateral Requirements
• SBA Loan Down Payment
• Global DSCR for SBA Loans
• Verifying Seller Financials
• What Changed in SOP 50 10 8.1