Buying a Plato's Closet franchise: SBA acquisition loan data
Since FY2018, SBA lenders have approved 22 7(a) loans to buy an existing Plato's Closet (classified mostly as Clothing and Clothing Accessories Retailers), totaling $13.7M. The median loan was $490,000, 24% lower than the $645,250 median for all SBA-financed acquisitions. 5 of these loans were approved in the last two fiscal years.
Terms signed in the LOI shape the purchase agreement that follows.
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What this tells a buyer
- Price range to expect. Loan size tracks purchase price. Half of Plato's Closet resale loans landed between $379,650 and $651,750.
- Lender experience exists. Pinnacle Bank alone has financed 5 Plato's Closet 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 Plato's Closet resale
The median SBA 7(a) loan for a Plato's Closet resale was $490,000 across 22 loans (FY2018 to FY2026). Pinnacle Bank, Citizens Bank and Union Bank and Trust Company have financed the most Plato's Closet 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%.
Plato's Closet acquisition loans by year
| Fiscal year | Loans | Total approved | Median loan | |
|---|---|---|---|---|
| FY2018 | 3 | $865K | $250,400 | |
| FY2019 | 2 | $928K | $463,850 | |
| FY2020 | 1 | $750K | $750,000 | |
| FY2021 | 4 | $1.8M | $394,800 | |
| FY2022 | 3 | $1.6M | $513,500 | |
| FY2023 | 4 | $4.2M | $689,000 | |
| FY2024 | 0 | $0 | - | |
| FY2025 | 2 | $1.1M | $562,750 | |
| FY2026 | 3 | $2.4M | $630,000 |
How often do these acquisition loans fail?
Fewer than 20 Plato's Closet 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.
The purchase agreement decides what you bought, not the loan approval.
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Lenders financing Plato's Closet resales
| # | Lender | Loans | Share | Dollars | |
|---|---|---|---|---|---|
| 1 | Pinnacle Bank | 5 | 22.7% | $4.7M | |
| 2 | Citizens Bank | 2 | 9.1% | $1M | |
| 3 | Union Bank and Trust Company | 2 | 9.1% | $680K | |
| 4 | VelocitySBA, LLC | 1 | 4.5% | $1.8M | |
| 5 | Live Oak Banking Company | 1 | 4.5% | $775K | |
| 6 | First Internet Bank of Indiana | 1 | 4.5% | $659K | |
| 7 | HomeTrust Bank | 1 | 4.5% | $630K | |
| 8 | Regions Bank | 1 | 4.5% | $603K | |
| 9 | The Huntington National Bank | 1 | 4.5% | $514K | |
| 10 | Old National Bank | 1 | 4.5% | $467K |
States where Plato's Closet units are bought
| # | State | Loans | Share | Dollars | |
|---|---|---|---|---|---|
| 1 | Texas | 3 | 13.6% | $1.3M | |
| 2 | South Carolina | 2 | 9.1% | $1.6M | |
| 3 | Georgia | 2 | 9.1% | $1M | |
| 4 | Tennessee | 2 | 9.1% | $729K | |
| 5 | Nebraska | 2 | 9.1% | $680K | |
| 6 | Virginia | 1 | 4.5% | $2.4M | |
| 7 | Vermont | 1 | 4.5% | $1.8M | |
| 8 | California | 1 | 4.5% | $775K | |
| 9 | Florida | 1 | 4.5% | $603K | |
| 10 | Michigan | 1 | 4.5% | $514K |
The purchase agreement decides what you bought, not the loan approval.
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How lenders classify Plato's Closet
Lenders code each loan to a NAICS industry. For Plato's Closet the codes used were:
| # | Industry | Loans | Share | Dollars | |
|---|---|---|---|---|---|
| 1 | Clothing and Clothing Accessories Retailers | 12 | 54.5% | $7.6M | |
| 2 | Used Merchandise Retailers | 9 | 40.9% | $5.5M | |
| 3 | Full-Service Restaurants | 1 | 4.5% | $514K |
Questions buyers ask
How much do buyers borrow to buy a Plato's Closet franchise?
The median SBA 7(a) loan for a Plato's Closet resale was $490,000 across 22 loans (FY2018 to FY2026). The middle half of loans ran from $379,650 to $651,750. 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 Plato's Closet acquisitions?
Pinnacle Bank has made the most SBA acquisition loans for Plato's Closet (5, 23% of the total). Citizens Bank, Union Bank and Trust Company, VelocitySBA, LLC follow.
What interest rate and term do Plato's Closet acquisition loans carry?
The average initial rate at approval was 7.43% (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 Plato's Closet resale riskier than other SBA-financed acquisitions?
Too few Plato's Closet 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 Plato's Closet units being bought with SBA loans?
Texas (3), South Carolina (2), Georgia (2), Tennessee (2), Nebraska (2). State counts follow where the brand has units and where SBA lending is most active generally; see the state pages for the overall picture.
The purchase agreement decides what you bought, not the loan approval.
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Related
- All Clothing and Clothing Accessories Retailers acquisitions
- Texas acquisitions
- South Carolina acquisitions
- Georgia acquisitions
- Pinnacle Bank
- Citizens Bank
- Union Bank and Trust Company
- All franchise brands
Brand name as recorded by lenders in the SBA file: "Plato's Closet" (franchise code S1327). Figures are aggregates of public SBA data and are not provided or endorsed by the franchisor.