Insurance Agency Business Loans

What can you use an insurance agency business loan for?

You can use an insurance agency business loan to pay for:

• Hiring new employees or a consultant
• Training employees
• Expanding your offerings
• Setting up a new office
• Marketing and advertising campaigns
• Equipment (such as computers and phones)
• Technology (such as new software)
• Boost cash flow issues
• Acquire another agency
• To refinance current debt

What kind of insurance agency business loans are there?

• Acquisition financing - this is a type of funding you can use exclusively for the acquisition of another company. This will usually come in the form of a bank loan or term loan, but there are other forms of financing available depending on how quickly you need to move. This is a good option if you want to keep your current business’s finances intact while being able to acquire and integrate a new business.
• SBA loans - there are generally 3 types of loans guaranteed by the SBA (Small Business Administration) that will be relevant for insurance agencies:
  • 7(a) loans: this loan can be used for any business purpose with a maximum loan amount of $5 million. Interest rates are generally between 3-6%.
  • 504 loans: these loans are available for the purchase of large assets, such as real estate. Again you can borrow up to $5 million.
  • Microloans: microloans are generally available to local businesses by a lender in their area to underserved communities or much-needed businesses. Loan amounts are usually small but are available up to $50,000.
• Bank term loans - A bank term loan is the traditional form of business loan where you borrow a certain amount and pay it back over a defined time, usually 5-10 years for bank loans. These loans have low interest rates but high qualification requirements and can take some time to approve.
• Term loans - these are term loans offered by online lenders. These loans are typically fast to fund with lower qualification requirements but do have higher interest rates than the lows of SBA and bank loans. They also offer more flexible terms - you can find short-term loans for as little as 3-6 months, though terms are typically 2-5 years.
• Equipment loans - if you need to borrow to fund the purchase of equipment, like laptops and office equipment, then an equipment loan may be the best choice for you. This type of financing works much like a term loan but the value of the loan is secured against the equipment, which helps to keep interest rates low.
• Business lines of credit - A business line of credit is where you are given access to a revolving line of credit you can use as you please for any business purpose. You can use as much or as little up to your credit limit and you’ll only pay interest on the money you’ve borrowed.
• Business credit cards - If you don’t need to borrow for a big investment, a business credit card can be a smart way to manage your cash flow, especially if your credit is good enough to qualify for a rewards card. This is also a good choice for new businesses as they are typically easier to access than other forms of credit.
• Merchant cash advance - If you process the majority of your payments through a payment processor, they may be able to offer you a merchant cash advance. This is where you borrow a lump sum and repay it through a percentage of every payment you process. An insurance agency usually has extremely predictable income, so your card processing company will be able to know with certainty how quickly you’re likely to pay back a merchant cash advance and be willing to lend to you.

Can you get a loan to start an insurance agency?

It’s always difficult to get a business loan to start a business - most people have to seek startup funding through their personal finances or other sources such as angel investors, crowdfunding, and other options.

You may find that provided you have sufficient funds put aside for your future customers should they need to claim, you can find startup funding through a lender, but you’ll need to research what is available to you.

What are the pros and cons of insurance agency loans?

PROS

• Boost your cash flow
• Take advantage of time-limited opportunities
• Take action rather than allowing your business to slow
• Invest in training or marketing to grow your business
• Insurance agencies have relatively predictable income, which lenders like
• Many of these options have affordable interest rates

CONS

• If you’re a new business, it may be difficult to get the financing you need
• Options can be expensive if you don’t have good personal credit
• Most options require a business lien and personal guarantee

Do insurance agency business loans require a personal guarantee?

The majority of business loans require both a personal guarantee and a business lien. Some of the alternative ways to borrow like credit cards and equipment loans will likely not require a personal guarantee or business lien.

How much can I borrow with an insurance agency business loan?

Most lenders will offer a maximum of between $1 million and $5 million, though it will depend on the lender, your revenue, and what the loan is for.

Insurance Agency Loan Calculator

What do you need to qualify for an insurance agency business loan?

Each lender will have different requirements, but you’ll generally need:

• A personal credit score over 600
• Annual revenue over $100,000
• At least 2 years in business

What do you need to apply for an insurance agency business loan?

The process will vary a little depending on what kind of loan you’re applying for and the individual lender. Online lenders will usually have a fast online application and ask for certain documentation there, and they will usually follow that with a phone call before making a decision in the span of just a few days. SBA loans and bank loans may involve a meeting and some additional steps before approval - they can take weeks or even months before you’ll receive your funding.

The documents you’ll need may include:

• Personal and business tax returns
• Bank statements
• Profit and loss statements
• A business plan

Apply for insurance agency financing

Ready to find the best insurance agency business loan for you? Compare the best business loans in our tables and when you find the one that best suits your business needs, all you need to do is apply. Many lenders offer fast online applications and can approve your application and provide funding in less than a week.