Lenders have unique requirements for insurance agencies. Although these requirements may differ among lending institutions, expect most to focus on a few general categories:

Motivation

It’s important for a lender to understand your motivation for financing to ensure they can meet your needs. Are you looking to:

• Use funds for hiring or marketing?
• Acquire another agency or book?
• Refinance existing debt to lower the interest rate or payment amount?

Tax Returns and Statements

Lenders will require tax returns and interim financial statements, including:

• Details about your agency’s revenue growth and its ability to control operating expenses during cyclical periods. 

• Your financial history for any non-recurring items in revenue or expenses. Be prepared to explain
• A summary of your carrier relationships, business mix and the related commission structures of each policy type.
• Explanation of any concentration risk in your portfolio, new customer growth, number of policies per household and retention rates.  

Personal Credit Review

The lender will ask questions regarding your agency’s tenure in the industry. Then, they will perform a personal credit review. When thinking about your credit, consider the following:

• Stronger credit generally leads to a better interest rate.

• Weak credit does not necessarily mean you won’t be approved for a loan. However, it may reduce the amount the lender is willing to lend, the rate will likely be higher, and terms may be more stringent.

If you have any pending litigation, disclose the details so the lender can determine the potential impact on your financial position.

Your Position

Make sure you have a strong understanding of the objectives of your loan, then review both your business financial trends and personal credit history. This will make you more prepared for your discussion with lenders.

To learn more about how Providence Bank can help you meet your agency’s goals, call 866-903-1700 today or visit Providence Bank online.