Financing Your FedEx Route: What Options Are Available?
Becoming a FedEx route owner is an exciting opportunity to enjoy the freedom and flexibility that come with owning your own business. However, if you are unable (or unwilling) to purchase that business with cash, you will need to know how the financing process works for FedEx routes before you take those first steps on the path toward ownership.
Initially, it is important to understand that securing financing for FedEx routes works a bit differently than it does for a typical business. The main reason for this is because distribution route businesses have no major assets—aside from their vehicle fleets—to serve as collateral, since the routes themselves are controlled by FedEx. As such, conventional bank loans may not be the best option, since they typically require more in the way of physical collateral.
What options does that leave available for would-be FedEx contractors?
Quite a few, actually. Simply because a traditional bank loan may be out of the question does not mean you have to give up on your dream of owning a FedEx route business. Below are several options for financing your FedEx route purchase, each with a brief explanation.
- Small Business Administration (SBA) Loan
This is perhaps the most common loan for purchasing FedEx routes. SBA loans are attractive because they typically require a lower down payment (10-20%) and offer a longer amortization schedule (usually 10 years) with lower monthly payments. You can learn more here about buying FedEx routes with SBA loans.
- Home Equity Line of Credit
The equity in your home may provide you with a fast and easy-to-access source of funding for your business. Depending on the amount of equity in your home, you may opt to leverage these funds to buy your FedEx routes. Should the amount of home equity fall short of the purchase price, you and the seller can also decide to bridge the gap by using seller financing.
- Retirement Savings
Another option is to use your retirement savings to fund your route purchase. It is important to note that accessing retirement funds to purchase a FedEx business must be done in a very specific manner and in accordance with certain federal regulations. That said, your retirement savings can be used to fund your route purchase outright, or leveraged as a down payment to procure a business loan.
- Private Lenders
Unlike conventional banks, private lenders are not mandated by corporate bylaws and thus have far more flexibility when it comes to approving or denying financing for a small business owner. For this reason, it may be worth considering a private lender as an alternative source of financing to purchase your FedEx route business.
Partner with KR Capital to finance your FedEx route business.
Securing financing to buy your FedEx routes requires the right lending partner. As the leading FedEx brokerage firm in the nation, KR Capital maintains an exclusive database of private, FedEx-specific lenders throughout the country—which means we can open doors to more buyers and fund transactions quickly.
With more than a decade of experience in buying and selling FedEx routes, we know exactly what information lenders are looking for and can help you prepare the required documents quickly and efficiently. To learn more about financing for FedEx buyers, call KR Capital today at (503) 664-0753 or fill out our online Buyer Info Request Form.