How to Secure a SBA Loan for FedEx Routes

We receive many questions each week about what it takes to get approved for an SBA loan. Advising clients about how to set themselves apart from other buyers is a key part of our services.

Every day, Route Consultant receives a record number of inquiries about listings via our website and hotline. Our team, and other vendors in this space, are inundated with requests and questions throughout the day. SBA lenders are in a similar position, with a large number of buyers looking to secure 7a loans for their business acquisitions.

Our goal here at Route Consultant is to prepare you to get to the front of the SBA lending line and set yourself apart from the other buyers vying for available operations.

Identify a Business of Interest 

When looking to secure a SBA loan, the banks will generally not engage with you until you have identified a business that you plan to purchase. Once you identify the right business, you will want to prepare a solid business plan for your operations. Banks will want to understand how you plan to successfully manage and receive returns on the funds you receive. 

You Need a Down Payment 

The first thing you should be aware of is the initial equity injection or down payment. To be safe, you should budget for a downpayment between 10% and 30% of the purchase price. Traditionally, SBA lenders require a 20% injection, however, there are lenders who will allow a 10% injection on a loan.

This can be in the form of a full 20% cash payment or a combination of cash from a buyer and seller financing from a seller. SBA lenders will accept seller financing as part of the down payment. Oftentimes, we see an injection combo of 10% cash with 10% seller financing to meet the 20% requirement of the bank. 

In addition to the down payment, you also want to have at least a 10% cash liquid buffer available. This will give you a greater chance of securing SBA financing. It is important to note that each bank is case-by-case. Not every lender will require the same amount of liquidity and cash injection, but these benchmarks will help you figure out a healthy purchase price for businesses you are looking at and how to increase your chances of securing the loan once you start the process. 

Provide a Personal Financial Statement

Along with your down payment, you will need to provide a personal financial statement as well. It’s in your best interest to have your last 3 years of tax returns ready and accessible. Other necessary items will include bank statements showing the source of your equity injection (where those funds are coming from), a resume for yourself, and prior work history.

If you have greater than 20% ownership in any other business, the banks will request financial statements, tax returns, and interim financials for those businesses as well. Again, we want to note that this is on a case-by-case basis depending on the lender.

Request for Information

A Request for Information is known as an RFI in our industry. We talk a lot about RFIs in our business. An RFI is a business plan for a FedEx Ground operation. In this RFI, you must explain how you plan to attack day-to-day problems such as safety, service, fleet management, customer interactions, and all of the other important pieces that FedEx Ground requires.

Having a document that speaks to your personal operating plans is imperative for both the bank and for your interactions with FedEx Ground and the terminal.

Provide Complete & Organized Information

If you can take the initiative on assembling the above documents and information, it will give you a leg up on the competition as you are looking to secure an SBA loan. SBA lenders spend a significant part of their days tracking down more details and information. If you can provide a complete packet upfront for your lender, they are going to be able to move you forward in the process more quickly.

Want to Learn More?

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