What is the interest rate on the line of credit secured by Southern Steer, and how is it calculated?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
e company had no uninsured cash.
4. Line of Credit:
The company secured a line of credit, with a limit of $200,000. The principal balance carries interest daily at LIBOR + 2.95% (LIBOR at September 30, 2024 was 5.44%). At September 30,
Source: Item 5 — and 7 of the FDD, Section 3.1 of the Franchise Agreement and Section 4.1 of the Multi-Unit Development Agreement are hereby amended to state that payment of the initial franchise fee and development fee will be deferred until We have satisfied Our pre-opening obligations, and You have commenced business operations. (FDD pages 168–290)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, the company has a secured line of credit with a limit of $200,000. The interest rate on this line of credit is calculated daily and is based on LIBOR (London Interbank Offered Rate) plus 2.95%. As of September 30, 2024, the LIBOR rate was 5.44%.
This means that the interest rate on the line of credit can fluctuate depending on changes in the LIBOR rate. For a prospective franchisee, this indicates that Southern Steer has access to financing, which could be a sign of financial stability. However, it's important to note that the interest rate is variable, so the cost of borrowing could increase if LIBOR rises.
As of September 30, 2024, the company had a balance of $0 on the line of credit, whereas on September 30, 2023, the balance was $249. This information is based on the financial statements as of those dates. Prospective franchisees should review the full financial statements and discuss the line of credit with Southern Steer to understand the terms and conditions, and how it might impact the franchisor's financial health.