ROBS FUNDING
These are known by the acronym ROBS plans.
What are Rollover as a Business Startup plans known as?
This is the interest rate that SBA 7(a) loans are based on.
What is the Prime Rate?
This type of credit line is extended to businesses without requiring collateral, allowing them to borrow as needed.
What is an unsecured line of credit?
This is the most common industry in franchising.
What is the food & beverage industry?
This term describes the business format where a franchisee is allowed to open multiple units within a specified area within a set timeframe.
What is an Area Development Agreement / Multi-Unit Development Agreement?
These are a means of funding a franchise debt free using pre-tax retirement funds while avoiding taxes and penalties on the retirement funds.
What are ROBS Plans or Rollover as a Business Start-Up Plans?
This personal report, required by lenders, plays a crucial role in determining eligibility for SBA loans.
What is a credit report?
This unsecured loan option allows you to pay off your loan early without incurring this.
What is a Pre-Payment Penalty?
They are largest sports franchise in the world with an estimated value of $9 billion.
Who are the Dallas Cowboys?
They are a fast food franchise, whose signature recipe consists of 11 herbs and spices and is considered a trade secret.
Who is KFC?
To comply with IRS rules, this entity must be created when forming a ROBS plan to ensure compliance with the IRS.
What is a C Corporation?
$5MM.
What is the maximum SBA 7(a) loan amount a borrower can get?
A 5-7 year period of time allotted to repay an unsecured loan.
What is the loan term?
This fee is a one-time payment made by the franchisee to the franchisor when entering a franchise agreement.
What is the franchise fee?
Founded in the 1950’s, they are considered the largest franchise in the world.
Who is McDonald's?
You incur this should you decide NOT to do a ROBS plan and if you pull money out of your qualified retirement plan prior to the age of 59 ½.
What is a 10% early withdrawal penalty?
This amount is required by the lender for start-up businesses and is typically 10%, 20%, or 30% of the total business investment.
What is the Owner’s Contribution or Owner’s Equity?
This unsecured loan provider offers this, which is unchanging throughout the loan and ranges from 9-15%, depending on the strength of the borrower.
What is a fixed interest rate?
This document, required by the Federal Trade Commission, must be provided to prospective franchisees before they sign any agreement.
What is the Franchise Disclosure Document (FDD)?
Starting in 2017, this franchisor specializing in home services has quickly grown to 16 brands and 1900 locations.
Who is Authority Brands?
These traditional retirement accounts are great for individuals who are self-employed and don’t have access to a company 401(k). These traditional retirement accounts are also eligible for ROBS plans.
What is an IRA or an Investment Retirement Account?
SBA loans often require this, which can include real estate, equipment, or inventory, as security for the loan.
What is collateral?
Unlike SBA loans, our unsecured loan option doesn’t require this from the borrower, which allows them to preserve their personal cash.
What is owner’s equity or cash injection?
This is the percentage of revenue that a franchisee pays to the franchisor on an ongoing basis.
What is a royalty fee?
Hot Water.
Where will you find yourself if you start your business with too much debt and not enough working capital?