Buying a Kumon franchise: SBA acquisition loan data
Since FY2018, SBA lenders have approved 14 7(a) loans to buy an existing Kumon (classified mostly as Exam Preparation and Tutoring), totaling $5.1M. The median loan was $306,550, 52% lower than the $645,250 median for all SBA-financed acquisitions. 2 of these loans were approved in the last two fiscal years.
Seller note standby terms and third-party consents are reviewed before closing.
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What this tells a buyer
- Price range to expect. Loan size tracks purchase price. Half of Kumon resale loans landed between $201,500 and $461,850.
- Lender experience exists. First Merchants Bank alone has financed 2 Kumon resales.
- Guaranty. The SBA guaranteed 77% of the dollars lent here.
- What the file leaves out. The SBA file does not record franchisor transfer terms or fees.
Financing a Kumon resale
The median SBA 7(a) loan for a Kumon resale was $306,550 across 14 loans (FY2018 to FY2026). First Merchants Bank, Gulf Coast Bank and Trust Company and U.S. Bank, National Association have financed the most Kumon resales. Too few of these loans are old enough to measure a charge-off rate; the average for all SBA acquisition loans is 3.5%.
Kumon acquisition loans by year
| Fiscal year | Loans | Total approved | Median loan | |
|---|---|---|---|---|
| FY2018 | 2 | $548K | $274,050 | |
| FY2019 | 1 | $221K | $221,000 | |
| FY2020 | 0 | $0 | - | |
| FY2021 | 1 | $525K | $525,000 | |
| FY2022 | 1 | $503K | $503,300 | |
| FY2023 | 2 | $653K | $326,250 | |
| FY2024 | 5 | $1.5M | $172,000 | |
| FY2025 | 1 | $854K | $853,600 | |
| FY2026 | 1 | $330K | $330,000 |
How often do these acquisition loans fail?
Fewer than 20 Kumon acquisition loans are old enough to measure losses reliably, so no charge-off rate is shown. The benchmark across all SBA acquisition loans in the FY2018 to FY2021 cohort is 3.5% by count. Non-acquisition 7(a) loans (every other stated purpose) approved FY2018 to FY2021 charged off at 6.2%.
"Charged off" is the SBA's final loss action on a defaulted loan after collection efforts. It lags default by a year or more, which is why only older cohorts are measured. It is not the same as a delinquency rate, and loans still outstanding can still fail. See charge-off in the glossary.
Terms signed in the LOI shape the purchase agreement that follows.
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Lenders financing Kumon resales
| # | Lender | Loans | Share | Dollars | |
|---|---|---|---|---|---|
| 1 | First Merchants Bank | 2 | 14.3% | $159K | |
| 2 | Gulf Coast Bank and Trust Company | 1 | 7.1% | $951K | |
| 3 | U.S. Bank, National Association | 1 | 7.1% | $854K | |
| 4 | The Bank of Houston | 1 | 7.1% | $525K | |
| 5 | Mission Valley Bank | 1 | 7.1% | $503K | |
| 6 | Leader Bank, National Association | 1 | 7.1% | $338K | |
| 7 | Live Oak Banking Company | 1 | 7.1% | $330K | |
| 8 | Landmark National Bank | 1 | 7.1% | $315K | |
| 9 | Wells Fargo Bank National Association | 1 | 7.1% | $298K | |
| 10 | Arizona Capital Source | 1 | 7.1% | $250K |
States where Kumon units are bought
| # | State | Loans | Share | Dollars | |
|---|---|---|---|---|---|
| 1 | California | 4 | 28.6% | $2.5M | |
| 2 | Arizona | 2 | 14.3% | $471K | |
| 3 | Michigan | 2 | 14.3% | $159K | |
| 4 | Missouri | 1 | 7.1% | $525K | |
| 5 | Massachusetts | 1 | 7.1% | $338K | |
| 6 | Georgia | 1 | 7.1% | $330K | |
| 7 | Kansas | 1 | 7.1% | $315K | |
| 8 | Texas | 1 | 7.1% | $298K | |
| 9 | Connecticut | 1 | 7.1% | $195K |
Terms signed in the LOI shape the purchase agreement that follows.
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How lenders classify Kumon
Lenders code each loan to a NAICS industry. For Kumon the codes used were:
| # | Industry | Loans | Share | Dollars | |
|---|---|---|---|---|---|
| 1 | Exam Preparation and Tutoring | 7 | 50.0% | $3.2M | |
| 2 | Elementary and Secondary Schools | 3 | 21.4% | $786K | |
| 3 | Educational Support Services | 2 | 14.3% | $525K | |
| 4 | All Other Professional, Scientific, and Technical Services | 1 | 7.1% | $338K | |
| 5 | All Other Miscellaneous Schools and Instruction | 1 | 7.1% | $298K |
Questions buyers ask
How much do buyers borrow to buy a Kumon franchise?
The median SBA 7(a) loan for a Kumon resale was $306,550 across 14 loans (FY2018 to FY2026). The middle half of loans ran from $201,500 to $461,850. The loan excludes the buyer's equity and any seller note and may include working capital, so the price is usually higher than the loan.
Which banks finance Kumon acquisitions?
First Merchants Bank has made the most SBA acquisition loans for Kumon (2, 14% of the total). Gulf Coast Bank and Trust Company, U.S. Bank, National Association, The Bank of Houston follow.
What interest rate and term do Kumon acquisition loans carry?
The average initial rate at approval was 8.63% (a blend of fixed and variable loans across several rate environments, so treat it as context, not a quote). The median term was 10 years.
Is a Kumon resale riskier than other SBA-financed acquisitions?
Too few Kumon acquisition loans are old enough to measure. The benchmark for all SBA acquisition loans is 3.5% charged off in the FY2018 to FY2021 cohort.
Where are Kumon units being bought with SBA loans?
California (4), Arizona (2), Michigan (2), Missouri (1), Massachusetts (1). State counts follow where the brand has units and where SBA lending is most active generally; see the state pages for the overall picture.
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Related
- All Exam Preparation and Tutoring acquisitions
- California acquisitions
- Arizona acquisitions
- Michigan acquisitions
- First Merchants Bank
- Gulf Coast Bank and Trust Company
- U.S. Bank, National Association
- All franchise brands
Brand name as recorded by lenders in the SBA file: "Kumon" (franchise code S0962). Figures are aggregates of public SBA data and are not provided or endorsed by the franchisor.