Short answer: it depends on the size of the deal and how long the seller will wait. A small route you can close this week fits a working capital advance. A larger purchase where the seller will wait a week or two fits a term loan. A full company acquisition where the seller will wait 30 to 45 days fits SBA 7(a) with 10% down, and it is by far the cheapest of the three. This guide walks through all three, what the lender needs from the seller, and how to think about what a route book is worth before you make the offer.
What you are actually buying
When a pool company buys a competitor’s route, or a pest company buys a retiring owner’s accounts, or a janitorial company buys a dozen commercial contracts, the trucks and the sprayers are a footnote. What is being bought is a list of customers who are already paying, the goodwill that keeps them paying, and usually a seller who agrees to stay on and introduce you. In accounting terms it is mostly goodwill. In lending terms it is the hardest kind of asset to finance, because there is nothing to repossess.
That is why most lenders who will finance a truck will not finance a route book. Routebook Capital does. The question is only which product matches the deal.
Option one: working capital, for the small deal that closes this week
A working capital advance runs $10,000 to $2,000,000 over 3 to 18 months, funds in 24 hours, and has no minimum credit score. It is underwritten on your own bank statements — $15,000 a month in deposits, 6 months in business — not on the seller’s. That makes it the right tool when a competitor calls on Tuesday and wants cash by Friday for a one-truck route or a neighborhood of pool stops. The payment is a fixed daily or weekly ACH, there is no lien on your trucks, and if you pay it off within the first 30, 60 or 90 days you keep up to 30% of the remaining cost.
The trade-off is cost and term. An advance is the most expensive of the five products and is repaid over months, while the customers you bought will pay you for years. It is the right answer for a small deal with a short clock, and the wrong answer for a large one.
Option two: a term loan, for the deal that can wait a week
A term loan runs $50,000 to $5,000,000 over 6 to 60 months, with a 650 minimum FICO, 24 months in business and $40,000 a month in deposits. The decision takes 3 to 7 business days. Files up to $500,000 are underwritten in-house with no prepayment penalty; above that the file is packaged and placed with bank lending partners.
The term is what matters here. A 36-to-60-month term lets the payment match the life of the customer base you are buying, so the route pays for itself out of its own billing rather than out of yours. The lender will want to see the seller’s customer list and revenue history alongside your own statements, returns, P&L and debt schedule.
Option three: SBA 7(a), for the full acquisition
Business acquisition is an eligible SBA 7(a) use, and the program finances goodwill, which is exactly what a route book is. The numbers: $50,000 to $5,000,000, 10% down, up to 10 years on the acquisition and working capital, a 680 minimum FICO, 24 months in business, and 30 to 45 days to close (10 to 21 on SBA Express, capped at $500,000). Routebook Capital packages the file and places it with SBA-preferred bank partners; it does not underwrite SBA credit in-house.
The payment on a 10-year loan is a fraction of the payment on a 12-month advance for the same money. The price of that is time and paperwork: three years of business and personal returns, a purchase agreement with a transition period, the seller’s customer data, and a seller willing to wait. If the brand you are buying is a franchise listed on the SBA Franchise Directory, the franchise transfer fee can go into the loan as well.
How to think about what a route is worth
We are not going to give you a multiple, because the right one depends on the trade, the market and the book, and anyone who quotes you one without seeing the customer list is guessing. What a lender and a buyer both look at is the same short list:
- Recurring versus one-off. A book of quarterly pest plans or weekly pool stops is worth more than the same revenue from one-time jobs, because it renews on its own.
- Retention. How many of last year’s customers are still customers. Ask the seller for the list with start dates.
- Concentration. Twelve commercial contracts where one is half the revenue is a different risk from two hundred residential accounts.
- Contracts and terms. Signed annual agreements with property managers transfer differently from a handshake with a homeowner. Check the assignment clause.
- Transition. A seller who rides along for sixty days and makes the introductions keeps far more of the book than one who hands over a spreadsheet.
- Density. Stops near your existing route are worth more to you than the same stops across town, because the drive time is already paid for.
What the lender needs from the seller
For a term loan or SBA file: the customer list with service frequency and start dates, revenue by customer, the signed commercial service agreements, and a purchase agreement with the price and the transition terms. A working capital advance needs none of it; the file is decided on your own statements.