Lenders have unique requirements for insurance agencies. Although they may differ among lending institutions, here are a few general categories you can expect a lender to focus on.
It’s important for a lender to understand your motivation for financing to ensure they can meet your needs. Are you looking to:
Lenders will require tax returns and interim financial statements, reviewing your agency’s revenue growth and its ability to control operating expenses during cyclical periods.
Review your financial history for any non-recurring items in revenue or expenses and be prepared to explain such items. Provide a summary of carrier relationships, mix of policies and related commission structures for each type of policy. Lenders will want to understand any concentration risk in the portfolio, new customer growth, number of policies per household, and retention rates.
Lenders will also ask about the tenure of your agency, in addition to performing a personal credit review. When thinking about your credit, here are a couple of things to consider:
If you have pending litigation, disclose the details so the lender can determine the potential impact on your financial position.
Understanding the objectives of your loan and reviewing both your business financial trends and personal credit history will better prepare you for your discussion with lenders.
To learn more about how Providence Bank can help you meet your agency’s goals, contact 866-903-1700 or visit Providence Bank online.