With recent changes to the FedEx business model now requiring an entity to service a minimum of 5 routes or 500 daily stops, it is more important than ever for an incoming buyer (and seller) to understand financing options when acquiring ground and linehaul route businesses.
Traditional Bank Financing
In the past, traditional banks were not open to lending to FedEx route operations, but times have changed. Recently, lenders have begun opening their doors to our industry, especially in the form of SBA financing. The SBA now recognizes FedEx as a qualified business on their franchise business directory. Note: The FedEx Ground business model is technically not a franchise but is included on the SBA franchise list for reference purposes. There are a few options available to borrowers within the SBA loan family. The two most used loan products are the SBA 7a and SBA Express loans.
SBA Financing Challenges for FedEx Contractors
Financing FedEx routes using SBA loans can come with some challenges. Regardless of SBA approval, few banks fully understand the FedEx business model and will typically pass on lending opportunities. It is imperative to partner with a lender that is knowledgeable and open to financing FedEx operations. We can help you navigate this discovery process as we are well connected with qualified lenders interested in providing financing to businesses within our industry.
Another challenge relates to the financial documents required to process an SBA loan. Both buyer and seller must be open and available to submit the documents needed to fulfill the lending process. It is important for both parties to keep this in mind before approaching a lender. Detailed personal financial data will be required of incoming buyers including a personal financial statement, personal tax returns, and bank statements showing necessary capital requirements. For sellers, accurate financials of the business will be needed to determine a value of the operation’s assets.
Next Steps Towards Securing a Loan For FedEx Routes
Once the necessary documents have been received, the next step is to qualify the prospective buyer and FedEx route business. We work closely with lenders to ensure they are fully equipped with key metrics and financial details to help make qualification decisions. We use SBA underwriters to facilitate pre-qualifications for buyers and generate a loan scenario that we can include in the business marketing package. Throughout the entire process, we maintain close communication between our lenders, buyers and sellers.