SBA loans for insurance agencies are available for the following:

• 100% financing for real estate – see this page for how to purchase property with no down payment
• 100% financing for expansion of an existing agency to purchase another insurance agency or “book of business” (see details below)
• Refinance a 2 year old seller note
• Refinance agency occupied real estate
• Refinance equipment, systems or other agency-debt

SBA Loans are available for both captive insurance agencies as well as independent agencies.

Purchasing Another Agency with an SBA Loan

If you’ve already owned one agency for long enough to be succesful and sufficiently profitable then it is possible to acquire another agency with 100% financing.  To be eligible for an SBA loan, you must be purchasing the business as an expansion of your existing agency with the exact same corporate structure/ownership.

90% financing is readily available for the purchase of another agency and there are multiple acceptable sources of down payment including the ability of the Seller to hold half of the down payment on a standby note.

General Requirements:

• Agency should ideally have stable or increasing revenues for at least the last 1 plus years.  (Many lenders will underwrite using the “net operating income” (net profit after “addbacks”) of the most recent tax year).
• Primary” guarantor should have approx 5 years insurance agency management experience.
• SBA does not have a minimum credit score requirement, but many lenders do
• Assignment of life insurance on the guarantor (amount determined by collateral available)
• Junior lien on personal residence typically required
• If less than 2 guarantors, you may need an acceptable documented succession plan with some lenders
• Maximum loan size: $10,000,000
• Term: 10 years (unless real estate is included and is the largest percentage of the purchase price, then a 25 year amortization is possible)
• Rates will vary with the most common offering being a 5 year fixed with a 10 or 25 year amortization depending on whether it is simply an agency purchase or a agency with commercial property.

Click here for more information on the SBA 7a program for business acquisitions.

Feel free to contact me at 1-800-414-5285 or jking (at) green commercial capital (dot) com.