12 Questions to Discover ApplePie Capital
There are many franchises and some are supported by loans from ApplePie Capital. ApplePie Capital is an origination platform with a new type of concept. It focuses on small business franchising. Read the interview below to learn more about their business and how it could be beneficial for investors.
LendingRobot: How would you describe ApplePie Capital in one sentence?
ApplePie Capital: ApplePie is 100% focused on becoming a growth engine for the franchise industry, and has an unwavering compassion for helping entrepreneurs access the capital they need to open or expand their franchise business.
LendingRobot: Where did the idea come from?
ApplePie Capital: Our CEO Denise Thomas came up with the idea, having had invested in equity of Supercuts 30 years ago. She continues to receive checks to this day from Supercuts and thought this was a worthy industry to apply her success of connecting investors with entrepreneurs.
LendingRobot: What makes you unique from others in your space?
ApplePie Capital: ApplePie is the only online lender serving the franchise industry exclusively. There are lenders who serve franchise owners in the broader context of small business lending but do not optimize financial solutions for franchisees and franchisors.
LendingRobot: Who is your typical investor?
ApplePie Capital: Our investors are institutional investors who purchase whole loans and accredited individuals who purchase fractional shares of loans on our online marketplace. Our marketplace enables individuals to easily diversify with a minimum investment size of \$2,500 per loan. Marketplace investors who sign up for our Automated Investing program can invest for as little as \$1,000 per loan
LendingRobot: How do your investors choose their investing strategy?
ApplePie Capital: Individual investors can sign up for our Automated Investing program, which allows passive participation in every loan on our marketplace with opt-out opportunity and lower minimums, creating a diverse portfolio that spans brand, geography, sector and loan types.
LendingRobot: How does your investment fit into an investor’s portfolio?
ApplePie Capital: ApplePie’s loans allow investors to focus specifically on the franchise industry, which accounts for \$552 billion of US GDP and 12% of all new business starts. We currently lend in all 50 states. To date, our portfolio includes 29 states and 34 brands within the franchise landscape.
LendingRobot: What is a typical loan like on ApplePie Capital?
ApplePie Capital: We offer loans to franchise entrepreneurs who want to start, expand, refinance or acquire franchise businesses. Our focus is on high quality brands with low closure rates, attractive unit economics, and strong franchisee profiles. ApplePie loans provide financing for all the start up costs a franchise business requires including leasehold improvements, working capital, soft costs, fixtures and equipment, and the franchise fee. Or, in the case of an acquisition, the purchase price.
The duration of the loans is 5 to 7 years with payment schedules of 5 to 10 years. Our interest rate average is 8.6%.
LendingRobot: Could you describe your risk assessment and credit model?
ApplePie Capital: One of the unique aspects of franchise lending is the existence of historical data. All franchise brands are required to file an “FDD” or “franchise disclosure document”, which includes historical information about all their business locations. This data provides a base of information to research a brand and outline a blueprint for the total costs of a particular business.
After selecting and underwriting the brand, ApplePie examines several borrower-specific factors such as debt-to-income, franchising experience, credit profile, liquidity, and net worth. All primary owners also provide a personal guarantee.
LendingRobot: What are three milestone numbers for ApplePie Capital?
ApplePie Capital: To date we’ve originated over \$60 million, with an average loan size of over \$400k. That represented 151% growth between 2015 and 2016. We currently have 29 employees and are growing quickly.
LendingRobot: What are the goals you can share for 2017?
ApplePie Capital: In 2017, we plan to expand our product offerings to franchisees and in doing so offer a more holistic one-stop shop that addresses all of their financing needs. For investors, we intend to providing access to a growing variety of brands.
LendingRobot: What is your greatest challenge?
ApplePie Capital: Our greatest (and most exciting) challenge is to continue to innovate and work with our partner brands to ensure that we are providing financial solutions catered to their specific needs. By doing so we can ensure a long term, sustainable future for them and for us.
LendingRobot: If you had one wish for your niche in the alternative lending space, what would it be?
ApplePie Capital: For franchising to become a more understood vertical with fewer barriers to entry and accessibility for all types of entrepreneurs and investors to participate.
Many thanks to ApplePie Capital for taking the time for this interview! We hope you enjoyed this interview.
- Vanessa Hoying
- March 23, 2017
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