Most consumers do not realize that Federal Express contracts with entrepreneurs to delivery its packages. These contracts, which typically average between one and three years (but typically renew at the end of the term), are a valuable asset that are bought, sold and financed just like any business. In general, the purchase price for a Fed Ex route business is between 3.5x – 5x cash flow (aka EBITDA). So a Fed Ex route business generating $1M in sales and $150K in EBITDA, may sell for $600K.
Unlike a typical business, benefits of owning a FedEx route(s) are no sales and marketing expenses, no inventory, no accounts receivables, and no bad debt. Revenues are based on packages delivered. As the covid pandemic has accelerated online purchasing, many routes are seeing increases in revenues between 20% – 40% YoY in 2020. The key metrics the FedEx entrepreneur has to focus on is controlling payroll costs and safety.
Benefits of FedEx SBA route loans
- 10 year term vs 5 – 7 years for conventional loans
- 20% down vs 25% for conventional
Drawbacks to FedEx SBA route loans
- Higher cost (initial fees and interest rates) than conventional loans
- Slightly longer time to close (45 – 60 days)
Typical SBA bank requirements for Fed Ex loans
- 20% down payment
- Credit score of 650 or higher
- Personal liquidity of 10% or more after
If you are looking to obtain an SBA loan to purchase a route, please complete our Find me a Lender form and we can route you to numerous banks in our network who have a ton of experience doing SBA loans for Fed Ex routes. Many local banks do not lend extensively via SBA loans and very few have done many, if any, FedEx route loans so let us help you expedite your financing by introducing you to banks who get it.