Professional Services
Business Funding for Insurance Agencies
Insurance agencies are valued on their book of business, and that book generates predictable recurring revenue through policy renewals. The challenge is that growing a book requires hiring producers, paying them during the ramp-up period, and waiting for renewal commissions to compound over time. Acquiring another agency's book is the fastest growth path but requires significant capital. Carriers also impose premium trust requirements that tie up working capital.
Common Uses
What Insurance Agencies Use Funding For
- Acquire another insurance agency's book of business and policy renewals
- Hire and train licensed producers with a salary draw during their ramp-up period
- Fund carrier appointments, E&O insurance, and compliance requirements
- Invest in agency management systems like Applied Epic or Hawksoft
Funding Options
Best Funding Types for Insurance Agencies
Book of Business Loan
Borrow against the value of your existing book or finance the acquisition of another agency's book. Lenders underwrite these loans based on commission revenue, retention rates, and carrier diversification.
SBA 7(a) Loan
The standard tool for acquiring an insurance agency. SBA loans cover the purchase price including goodwill, which is the primary asset in any agency acquisition. Terms of 10 years keep payments aligned with the long-term nature of renewal income.
Business Line of Credit
Maintain a revolving line to fund producer compensation, marketing costs, and technology upgrades between commission cycles. Commission income arrives in lumps tied to carrier payment schedules.
What Lenders Look For
Qualification Notes for Insurance Agencies
Related Industries
Related Professional Services Funding
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