Regarding financing route loans, the most popular option is the SBA 7a loan program. This program allows borrowers to place 20% down and is amortized over ten years. The rate is WSJ Prime Rate plus 2.75%
How long does it take for an SBA loan to close? On average, 90 days.
Does the seller carry a note? This depends on the structure of the deal. For example, sometimes, the bank asks the seller to carry a 10% of the purchase price with a balloon note. A balloon note allows the seller to collect after 2-5 years vs. the entire ten years.
Can you introduce us to your lenders? Just send us an email we would be happy to.
What kind of collateral is required? This depends on several factors, including creditworthiness and the deal’s strength. Our lenders will discuss this with you directly.
What additional information will the SBA require?
- Borrower information form: Complete SBA Form 1919 and submit it to an SBA-participating lender.
- Financial statements: Complete SBA Form 413 (personal financial statement). This helps SBA and other stakeholders assess your eligibility.
- Business financial statements: Submit the following to help show your ability to repay a loan:
- Profit and loss statement – Current within 180 days of your application. Also include supplementary schedules from the last three fiscal years.
- Projected financial statements – Include a detailed, one-year projection of income and finances and explain how you expect to achieve this projection.
- Ownership and affiliations: Provide a list of names and addresses of any subsidiaries and affiliates, including concerns in which you hold a controlling interest or that are otherwise connected to you.
- Business license or certificate: Provide a copy of the original business license or certificate of doing business. If your small business is a corporation, stamp your corporate seal on the SBA loan application form.
- Loan application history: Include records of any loans you may have applied for in the past.
- Income tax returns: Include signed personal and business federal income tax returns of your business’ principals for the previous three years.
- Resumes: Include personal resumes for each principal.
- Business overview and history: Provide a history of the business and its challenges. Explain why you need the SBA loan and how it will help your business.
- Business lease: For the purchase of a FedEx route you would furnish the FedEx Ground Contract.
- If you are buying an existing business, gather the following information:
- Current balance sheet and profit and loss statement
- Federal income tax returns for the previous three years
- The proposed bill of sale, including the terms of sale
- Asking price with a schedule of inventory, machinery, and equipment, and furniture and fixtures
- Franchise, jobber, or licensing agreements
- Proof of equity injection
- You may be required to submit more SBA forms based on the specific use of proceeds or fees paid on a loan package or to a broker or agent.