THE SITUATION: RETIREE ACQUIRES FEDEX ROUTE BUSINESS FOR CAREER TRANSITION
A logistics professional who retired early wanted to take on a new challenge and the potential to own a Fedex delivery route seemed perfect. However, the revenue is based on projections, so many banks shy away from this type of deal. First Business Bank’s SBA team worked with the borrower to structure an SBA loan to accomplish the transaction.
any banks prefer to fund straight forward acquisitions, but this deal was more challenging. A projection based business that grew exponentially during the pandemic, Fedex routes include protected-territory zip codes that can cause some complications for inexperienced lenders.
LACK OF CASH FLOW
Some Fedex route owners are downsizing or spinning off some of their business. When that happens, there’s a lack of documented cash flow history that makes many banks wary. However, the borrower’s solid business experience coupled with the Fedex route business model and collateral sufficed for the SBA 7(a) loan program in this case.
THE SOLUTION: 7(A) SBA LOAN FROM FIRST BUSINESS BANK
First Business Bank provided a 7(a) loan totaling $1.1 million, which included purchasing the business, purchasing equipment, intangibles, and providing working capital. Our borrower provided a down payment from personal savings and retirement.
An SBA-designated Preferred Lending Partner, First Business Bank’s underwriting and closing team communicated closely with the client to ensure we achieved this acquisition and exceeded expectations.
First Business Bank’s expertise in SBA Lending afforded us the opportunity to work with the SBA directly and helped us to structure an acceptable loan that satisfied the seller, our client, and the SBA.
The franchise nature of the Fedex route acquisition made it a great fit for the SBA 7(a) program for our borrower to purchase the routes while providing working capital to ensure the continued success of the business.
"I’m proud that we could help this client secure a business for the next phase of his work career. Ultimately, our SBA team’s CREATIVITY AND FLEXIBLITY HELPED TO GET THIS DEAL DONE.”
— John Hanlon, Vice President – SBA Lending