What is the interest rate on the Small Business Administration note payable for Boulder Designs?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
greements in the amount of $563,824 and $576,824, respectively, consist of franchise rights previously sold by the Company that were repurchased due to various circumstances with the intent to resale. An impairment loss of $28,000, $30,000, and $30,000 was charged to operations during 2024, 2023, and 2022, respectively.
(4) Notes Payable
Notes payable at December 31, 2024 and 2023 includes three notes payable on demand with an aggregate balance of $248,000 and $255,000, respectively. One note bears interest at a rate of 4% and the other two notes do not have a stated interest rate.
(5) Long-Term Debt
Long-term debt at December 31, 2024 and 2023 consists of the following:
| 2024 | 2023 | ||
|---|---|---|---|
| Note payable to a finance company that matures in | |||
| July 2025 with no stated interest rate and monthly | _ | ||
| payments of $1,399; secured by |
Source: Item 23 — RECEIPT (FDD pages 50–217)
What This Means (2025 FDD)
According to Boulder Designs' 2025 Franchise Disclosure Document, the interest rate on the note payable to the Small Business Administration (SBA) is 3.75%. This note matures in June 2052, with monthly payments of $1,226. The unpaid interest and principal are due at maturity, and the note is secured by certain equipment. As of the end of 2024 and 2023, the outstanding balance on this note was $240,000.
For a prospective Boulder Designs franchisee, this information is relevant because it provides insight into the company's financial obligations and debt structure. The SBA note represents a significant long-term liability for Boulder Designs, which could impact its financial flexibility and ability to invest in growth initiatives. The fact that the note is secured by equipment means that in the event of default, the SBA would have a claim on those assets.
The terms of the SBA loan, including the interest rate and maturity date, are important factors to consider when evaluating the overall financial health of Boulder Designs. While a 3.75% interest rate may be considered favorable compared to other forms of financing, the long-term nature of the debt and the balloon payment due at maturity could pose risks for the company.
Franchisees should also be aware that the franchisor's financial stability can indirectly affect their own businesses. A financially sound franchisor is better positioned to provide ongoing support, invest in marketing and innovation, and navigate economic challenges. Therefore, understanding the details of Boulder Designs' debt obligations is a key part of assessing the overall franchise opportunity.