Top Banks for SBA Insurance Agency Loans

Last update: May 2, 2022

 

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The United States has one of the largest insurance industries in the world with some of the highest premium volumes to be found. By 2020, insurance premiums written in the country had surpassed $1 trillion. The average US household spends nearly $4,000 on health and $1,500 on vehicle insurance. These figures are only projected to grow in the coming years. The demand isn’t going to subside any time soon and this provides small business owners with a great opportunity to start their own insurance agency business. However, insurance agency loans can be difficult to obtain, and many small business owners are unable to start their businesses without funding.

Banks are apprehensive about lending to insurance agency businesses as the internet provides another avenue for people to easily compare and purchase the insurance plans they need through many different platforms and portals. Even if they are willing to provide loans, the terms and interest rates often make the cost of borrowing prohibitively expensive. The market landscape may be challenging but there’s still a place for insurance agency businesses in the market. If you’re looking to obtain funds for your business, consider SBA insurance agency loans.

 

Benefits of owning an insurance agency business

 The demand for insurance products remains at an all-time high and there’s no indication to suggest that it’s going to subside in the years to come. There will always be customers who require property, renters, health, life, home, auto and even travel insurance. People like to be protected against the unforeseen and insurance provides them with the peace of mind that they’ll be covered from significant losses. They will always look for the best deal that provides them with the best protection at the lowest premiums. Despite the rapid increase in online insurance platforms, countless people still rely on insurance agencies to find the perfect plan that ticks all of those boxes.

It’s easy to get overwhelmed on these platforms and people always have trouble finding out which plan is right for them. They prefer speaking to an insurance broker who can work with them to find the right plan. The human element is what draws customers to an insurance agency. They can speak to an actual person, have all of their questions answered and are always able to reach out if they have any issues down the line. That’s a benefit the online platforms can’t take away.

 

How to get approved for insurance agency loans

Conventional options for insurance agency financing are limited since banks and lenders view the business as risky. The primary source of revenue for insurance brokers is a percentage of the policy premium and this tends to be in the single digits. Any change in the premium or commission structure can significantly impact the revenues of an insurance agency and its ability to stay solvent.

This makes it quite difficult for new business owners to get approved for insurance agency loans since the lenders are unsure whether they’ll be able to survive in the business. Even well-established insurance agencies can run into problems when trying to secure funding since there’s a relatively low appetite in the lending industry to fund such businesses. This is precisely why SBA insurance agency loans are the preferred option for business owners in this industry.

SBA Insurance Agency Loans

Insurance agencies are having to adapt to the evolving trends in the industry. As they compete with online platforms that have lower overheads compared to a brick and mortar business, insurance agencies must invest in improving their capabilities and expanding their service offerings to remain competitive. Doing that requires a substantial investment for startup businesses and even those who have been in this industry for a long time.

SBA insurance agency loans can help you buy an existing insurance agency business, streamline your operations by injecting more working capital, hiring new staff, expanding your business locations, and more. Even though these loans are sanctioned by conventional banks and lenders, it’s relatively easier to obtain them since the Small Business Administration guarantees a significant chunk of them. This makes the loans less risky for lenders and enables small business owners in the insurance agency industry to get the financing they require.

 

SBA 7(a) loan for insurance agency

These are the most commonly used insurance agency loans due to their flexible nature, attractive interest rates and long repayment terms. An SBA 7(a) loan can be obtained by both captive insurance agencies that are affiliated with a specific insurer and independent insurance agencies that work with several different insurers. This SBA loan for insurance agencies can also be used to purchase an existing business.

You can get approved for loan amounts of up to $5 million with the repayment terms of up to 10 years if the funds are used for equipment and working capital. The repayment period can be stretched up to 25 years if the funds are used for commercial real estate.

The funds can be used to build a new insurance agency, purchase an existing agency, purchase the clients of another agency, refinance existing debt and meet working capital requirements such as employee salaries.

 

How to apply for an SBA insurance agency loan

We work with the top SBA lenders across the country to help insurance agency businesses obtain the financing that they need to succeed. Our vast network of lenders and financial institutions also includes SBA Preferred Lenders that are committed to quickly approving loans for small business owners. These are just a few of the top SBA lenders for insurance agencies:

RankBankCityState# of LoansAvg Loan $Avg Interest
1United Midwest Savings BankDe GraffOH174$928,5205.8%
2U.S. BankCincinnatiOH172$198,5476.1%
3Live OakWilmingtonNC164$1,077,4875.5%
4The Huntington National BankColumbusOH75$122,9285.7%
5MetaBankSioux FallsSD45$958,5786.0%
6First Home BankSaint PetersburgFL33$202,8336.3%
7M&TBuffaloNY33$106,1737.1%
8TD BankWilmingtonDE31$106,7687.2%
9Readycap Lending, LLCBerkeley HeightsNJ30$638,7436.1%
10Bankwell BankNew CanaanCT26$2,002,0155.5%

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