What to Expect When Financing Your FedEx Route Business

Photo by Jesse Bowser

When we say conventional financing we mean receiving a business loan from a local or national bank or credit union. This is opposed to buying a FedEx route for sale with an all cash offer or using a Small Business Association (SBA) loan.

Why should you consider conventional financing for your FedEx route purchase?

Conventional financing terms typically have lower interest rates than SBA loans.

  • The loan approval process at a local or national bank is faster (30 days or less) than the SBA loan approval process.

  • The fees (particularly the origination fee) are dramatically less costly than SBA fees.

  • If you have a house or car loan with the bank, you may be more likely to receive approval.

Why might conventional financing not be a good fit for your business?

  • For approval, you must have an excellent credit score and a solid personal financial statement.

  • Your loan terms will likely require a 5-7 year amortization schedule (whereas the SBA may allow a 10 year repayment plan).

  • Conventional financing will most often require a 25% minimum down payment.

The Impact of Amortization

Think the loan schedule doesn’t make much difference? Look at how dramatically an amortization schedule may impact your monthly payments:

Let’s say you buy a route business for $500,000 with $125,000 down (25%). So, you are financing $375,000 for your route purchase.

Loan @ 7% interest over 5 years, monthly payments: $7,425 ($70,527 in interest*)

Loan @ 7% interest over 7 years, monthly payments: $5,660 ($100,419 in interest*)

Loan @ 7% interest over 10 years, monthly payments: $4,354 ($147,488 in interest*)

*over the life of the loan

Deciding on the best way to finance your route purchase (and on your target route price) is a critical piece in this process. Need help analyzing the numbers more?

Talk to our team for additional guidance or to find the right-fit FedEx routes for sale.

Please note: our team does not provide financing, but we do provide guidance about the process of buying a FedEx Ground route for sale. We can help you better target a listing that will meet your financing and monthly cash flow goals. We can also help you evaluate the financials of a route for sale. Finally, we have a network of lenders that provide financing and we can help direct you to the right lender for your specific needs.