Insurance agency loans can provide the capital you need to start or grow your operations and meet your business goals. We’ve evaluated the best insurance agency loans based on loan terms, fees, rates, customer satisfaction, and overall quality.
If you require cash due to a cash flow shortfall or have a less than perfect credit score, American Express Business Blueprint™ could be a promising option.
Fundera does not lend money directly but offers a digital marketplace where you can connect with lenders to provide a financing solution for your business.
National Funding offers small businesses working capital and equipment financing loans that are suitable for a broad range of businesses, and you could receive approval and funding within 24 hours.
Insurance agency loans are available from banks, credit unions, and other lenders specializing in small business loans. These loans are typically used to finance operations, growth, or start up costs.
The amount you can borrow depends on the strength of your business plan and personal credit score. You may also need collateral or another type of guarantee (such as a personal guarantee) to secure the loan.
Most lenders require that you have experience in selling insurance policies before they’ll consider approving your application. If you don’t have any experience, you may still be able to get approved if you can show that you have sound business plans and a history of success with other types of businesses.
What are the requirements for an insurance agency loan?
Here are some requirements for an insurance agency loan:
Company size: Before making any financial commitments, lenders need to know your business size. For example, if you have multiple locations or employees, it will be easier for you to get approved for larger loans than if you were just starting on your own.
Credit score: A lender will first check your credit report to see if you’re currently in good standing with your creditors. If you have any blemishes on your credit report, it could make it challenging to secure financing.
Business plan: You’ll need to provide the lender with the details of how much money you want to borrow and how you plan to use it, e.g., buying inventory, equipment, or a building. They will also want assurance that you know what you’re doing when starting a business and managing finances within it.
Annual revenue: Lenders want to see how much money your insurance agency can make each year. If your business does not have enough revenue history, then lenders will want to see projections for future years and months until they have enough data points.
Time in business: Some lenders will also want to see that you have a track record of success in the fitness industry. This can be a balance sheet or income statement showing profit earned in the previous six months and tax returns showing income earned during those six months.
What are the types of insurance agency loans?
There are a variety of options available for financing. Here are some of the following:
SBA loan: Banks and other financial institutions process SBA loans, while the SBA guarantees these loans. These loans are available for various purposes, including working capital, equipment, and real estate.
Term loans: Term loans are provided as a lump sum for a specific time, typically between one and five years, and paid monthly with principal and interest. You may be able to refinance your loan with another lender after completing a minimum number of payments, typically 6 or 12.
Business line of credit: A line of credit allows you to borrow up to a certain limit at any time as needed. For example, if you need $50,000 to purchase new equipment, the line of credit would allow you to take out $50,000 immediately and pay it back over time as needed. If you only needed $10,000 initially, then all that money would be available immediately. You can think of a line credit like a credit card but with a lower interest rate. Business lines are often used as an alternative to traditional loans because they offer lower rates and more flexibility than conventional financing options.
Equipment financing: The most common type of loan for insurance agencies is equipment financing and it’s secured by the equipment you purchase. This loan makes it easier for agents to purchase the necessary assets to run their businesses. This loan can be used for items such as computers, desks, chairs, or even vehicles used by sales staff.
What are the benefits of getting an insurance agency loan?
The benefits of getting an insurance agency loan include:
Tax benefits: You can earn tax benefits from your state and federal governments. The amount of tax deduction depends on how much money is spent on interest, equipment, labor costs, and other expenses related to running your business.
Grow your business: You can use the loan for any expense related to growing and running your business. You can use it for buying inventory or equipment, paying staff salaries, marketing expenses, or even covering operating expenses.
Improves credit score: Your credit score is a number that represents how well you manage your finances, and lenders use it to determine whether or not they’ll lend you money. When you borrow money and pay it back on time, this shows lenders that you’re responsible with their money and can be trusted with larger loans in the future.
How can you use an insurance agency loan to grow your business?
Here are some ways that you can use an insurance agency loan to grow your business:
Hire new employees: If you’re considering hiring new employees to increase sales, an insurance agency loan can help you pay for the necessary training that comes with bringing on new staff members. The loan can also help you cover the cost of salaries, benefits, and other expenses associated with hiring more workers.
Marketing and advertising: The loan could also be used to launch a marketing campaign to boost brand awareness and attract new customers. The advertising could include TV ads, digital ads, print ads, or billboards.
Invest in new technology: As an insurance agency owner, you know that technology is essential to running a successful business. Buying the latest software or upgrading your computer systems can be expensive — especially when you’re starting and there’s not much revenue yet. A loan can help you fill the gap.
Cover expenses during growth: When your business is growing rapidly, there may be times when you need extra cash to cover expenses or make improvements before they become necessary. The loan can provide this additional capital to keep pace with demand without having to dip into savings or cut back on other expenses like advertising.
How to choose the best insurance agency loans
Here are some factors to consider when select an insurance agency loan:
Know what you need: Before shopping around for loans, you must know exactly what financing will be most beneficial for your business. For example, if you need money for equipment purchases or renovations, then equipment or a line of credit may be best suited for your needs.
Flexible repayment schedules: Consider a lender who offers flexible repayment schedules. Keep to note that a longer term will be less stressful on your cash flow since payments are stretched, but the overall interest you pay will be higher. This is the opposite for shorter terms.
Compare interest rates: When you compare loans, some loans may have lower interest rates than others, but they may also have higher fees or other associated costs. You will need to understand what the total cost of each loan is going to be before deciding which one is best for your situation.
Application fees: Some lenders may charge an application fee for their loans or even a credit check fee. These can add up over time, so you must consider how many applications you’ll need to make before you decide on a lender.
