How to Buy a FedEx route with an SBA loan

Securing SBA financing to purchase FedEx routes is notoriously difficult. Countless buyers, business brokers, and sellers across the country recount similar experiences in which they were led on by a lender for weeks before ultimately finding out that the loan request was denied. Here’s what you need to know to buy FedEx routes with an SBA loan.

OBSTACLES

There are a number of different reasons that make financing FedEx routes with an SBA loan difficult:

• The routes do not have enough assets available to collateralize the loan.
• FedEx routes have only been eligible for SBA financing for a few years, and many lenders and business brokers are not aware of this.
• Very few lenders want to finance FedEx routes and even fewer understand the FedEx business model enough to get the loan underwritten and approved.
• Many sellers refuse to provide the tax returns for the routes.

GUIDELINES

Despite these difficulties, FedEx routes are eligible for SBA financing and have an extremely low default rate. If you are interested in applying for an SBA loan to purchase FedEx routes, here are some guidelines that you should keep in mind:

• If the seller filed tax returns for the routes, the tax returns are required; if there was a previous owner who filed the tax returns, those tax returns may not be required.
• It is okay to buy a portion of the routes that make up the complete business entity but you will need financial statements separated for the routes being acquired and for the routes not being acquired.
• The weekly settlement sheets provided by FedEx for each route are crucial to financing.
• The equity injection requirement will be 10-20% of the purchase price, and can be made up of buyer’s down payment and seller financing.

HOW DO I GET STARTED?

YourSBA.com offers a suite of loan calculators for SBA loans and other funding sources here. You can automatically estimate your down payment requirement, monthly loan payments, SBA borrowing limit, and more.

See if you qualify for an SBA loan by taking just a few minutes to give us some basic information here. The pre-approval process takes less than one day and does not require a hard credit pull.