Is the availability under the revolving loan for Aunt Millies Bakeries subject to any conditions or restrictions?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
$95,238 beginning June 1, 2021. The term loan, revolving loan, and letters of credit was set to mature November 30, 2023. All unpaid principal and interest was due upon maturity.
In December 2022, the Company amended their Credit and Security Agreement ("Amended Credit and Security Agreement") whereby the term loan, revolving loan, and letters of credit maturities were extended to March 2025. The term loan monthly principal payments of $95,238 continue and any remaining outstanding borrowings are due upon maturity.
The term loan, revolving loan, and letters of credit bear interest at a variable rate for varying amounts based on LIBOR or a rate not to exceed the prime rate, both rates adjusted by a factor tied to a quarterly financial performance ratio. Availability under the revolvin
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries's 2025 Franchise Disclosure Document, the availability under the revolving loan is indeed subject to certain conditions and restrictions. The document mentions a Credit and Security Agreement that includes a revolving loan.
The FDD states that the availability under the revolving loan is subject to a borrowing base calculation. This means the amount a franchisee can borrow depends on the value of specific assets, such as accounts receivable or inventory. The agreement also includes other restrictions common in such agreements, which could involve financial ratios or other performance metrics that Aunt Millies Bakeries uses to determine creditworthiness. Additionally, any borrowings under letters of credit would reduce the availability of the revolving loan, further limiting the funds accessible.
For a prospective Aunt Millies Bakeries franchisee, this implies that access to the revolving loan is not guaranteed and depends on several factors. The franchisee should carefully review the terms of the Credit and Security Agreement to understand the specific borrowing base calculation and other restrictions. Understanding these conditions is crucial for financial planning and ensuring sufficient access to capital when needed. The franchisee should also inquire about the specific criteria used to determine the borrowing base and any potential changes to these criteria.