SBA Update from Siegel Capital

Business Brokerage Press — 7/17/2008

With the prime rate at 5%, the maximum allowable rate charged to a business acquisition loan is 7.75%. Many lenders will come in somewhere under that....but some will charge the maximum rate, especially when there is no significant collateral.

The difference of a quarter of a point really does not make much difference. The borrower saves money by closing the transaction sooner, so he or she may realize the profits of the business.

For example:

The monthly payment for a 10 year, $500,000 loan is $5,805 at 7.00% interest and $5,870 at 7.25% interest.

When the 7-A loan includes real estate as well as the business, the rates are typically lower, and will average about 6.75%.

Benchmark Updates

Business Brokerage Press — 7/16/2008

Restaurant Labor Costs

The median percentage of sales spent on salaries and wages per industry segment:

Family Dining 32.5%
Quick Service 28.6%
Casual Dining 33.5%
Fine Dining 34.5%

Source: National Restaurant Association’s 2007/2008 Restaurant Industry Operations Report as published in Nation’s Restaurant News, May 19, 2008.

The percentage of sales alcoholic beverages make up for a full-service restaurant is 21 percent.

Source: National Restaurant Association as published in Franchise Times, May 2008.

The Business Broker Online Magazine

SBA Update from Siegel Capital

Benchmark Updates