Length of loan –New Store

[Emerson]

What length of a loan term would you look for on a new store ?

5 years sounds like the best way to get loan out of the way but if the new store did not perform you have the heavier nut to crack.

Curious what thoughts or experience anyone has.

Recently saw a quote for a new store that listed a 10 year loan.

[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.

[Author]

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