What assets secure the revolving loan for Chesters?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
------| | 2026 | 580,684 | | 2027 | 448,557 | | 2028 | 300,148 | | 2029 | 116,999 $ 1,991,751 | The Agreement includes a revolving loan for maximum borrowings up to $1,000,000 that matures December 31, 2026. Interest is calculated at the greater of 5% or Prime rate plus 1% (8.5% at December 31, 2024 and 2023) and secured by essentially all business assets. There were no amounts outstanding under the revolving loan as of December 31, 2024 and 2023. The revolving loan matures on December 31, 2026.
As part of the Agreement, the Company is required to comply with financial and nonfinancial covenants. Management believes it was in compliance with all covenants as of December 31, 2024. The Company was not in compliance with certain financial covenants for the yea
Source: Item 21 — **FINANCIAL STATEMENTS (FDD page 48)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, the revolving loan agreement includes a maximum borrowing amount of up to $1,000,000, which matures on December 31, 2026. The interest rate is calculated as the greater of 5% or the prime rate plus 1%, which was 8.5% as of December 31, 2024, and 2023.
This revolving loan is secured by essentially all of Chesters's business assets. This means that if Chesters were to default on the loan, the lender would have a claim on nearly all of the company's assets to recoup their losses.
As of December 31, 2024, and 2023, there were no outstanding amounts under this revolving loan. Additionally, as part of the agreement, Chesters is required to comply with both financial and nonfinancial covenants. While Chesters's management believed they were in compliance with all covenants as of December 31, 2024, they were not in compliance with certain financial covenants for the year ended December 31, 2023, though the bank granted a waiver for this noncompliance during 2024.