Reply To: Length of loan –New Store

[Jordan Berry]

I’ve seen them at 5, 7 and 10 years. I don’t think there is a right or wrong loan length. A lot depends on the performance of the store and the preference of the owner. Some people don’t like to carry debt so they choose a shorter loan. Some people like to leverage as much as possible and maximize cash flow at the same time, so choose a longer loan length.

But your assessment seems pretty accurate. You’ll have the higher loan payments at 5 years but if you don’t want to carry the loan and the business can support it, it’s probably the way to go.