Did You Know You Can Buy FedEx Routes with an SBA Loan?

Across the country, countless people have been impacted by COVID-19. And not just physically, but financially as well. Widespread safe distancing mandates and strict new safety precautions have forced many businesses to make difficult decisions, from laying off staff to closing their doors permanently.

If you are one of millions of Americans looking for employment as the country learns to adjust to this “new normal” amid a pandemic, purchasing a FedEx route business may be an option worth considering. Being a FedEx contractor offers tremendous revenue potential, along with the flexibility and autonomy of owning your own business. Plus, people will always need to ship and receive packages.

Even more appealing, you may be able to qualify for a Small Business Administration (SBA) loan to fund your FedEx routes and get your business up and running. The SBA loan program was created to provide financial assistance for small businesses with the goal of preserving free enterprise and bolstering the United States economy, and the loans come with key benefits for those interested in buying FedEx routes.

SBA loans offer more leniency and flexibility.

For individuals with low or limited credit history, it is often easier to secure an SBA loan than a traditional business loan. While SBA loans are not provided by the U.S. Small Business Administration, they are backed by the SBA (i.e. the federal government).

SBA loans typically have lower down payment requirements.

Unlike conventional loans, which may require a down payment of 25% or more, SBA loans generally require the buyer to make a down payment of 10-20% of the total loan value. However, this number can vary depending on several things, including the strength of the guarantor and the amount of seller financing negotiated.

SBA loans offer longer repayment terms than traditional business loans.

Compared with conventional loans, which require repayment within five (or sometimes fewer) years, an SBA loan is traditionally amortized over a 10-year period and the monthly payments are lower. This can allow FedEx contractors to conserve cash and build their business without constantly worrying about repayment.

A few things to consider before you begin the SBA loan application process.

Keep in mind that SBA loan interest rates are often slightly higher than conventional financing rates, but there is a limit (or cap) on how high they can go. In addition, because FedEx route businesses typically lack the assets needed to collateralize a loan, personal assets (such as your home or car) may need to be pledged to secure the loan.

Earlier this year, the president signed into law the Coronavirus Aid, Relief, and Economic Security Act (or CARES Act) to provide additional support for individuals and businesses impacted by COVID-19. You can read more here about the resources and coronavirus funding options currently available for small businesses.

Finally, it’s important to work with an experienced FedEx broker.

If you think becoming a FedEx contractor is the right choice for you, the first step toward success is finding a broker who knows the ins and outs of the industry.

In business for nearly a decade, KR Capital has an intimate knowledge of the financing process for FedEx routes and knows what both buyers and sellers can expect throughout. We have developed a network of FedEx-specific lenders to aid in the financing of our transactions, and we are very familiar with the documents required to secure an SBA loan.

At KR Capital, we proactively prepare our clients to become pre-approved for bank financing, and interested buyers receive a step-by-step roadmap to procure their loan. Not only do we make sure you have all of the necessary paperwork in order, but our expertise can help make the approval process go faster so you can be up and running sooner.

Ready to finance your FedEx route business? Fill out our buyer information request form or call us today at 503.664.0753 to learn more.