AGENCY ACQUISITION AND PERPETUATION FINANCING
WHY WOULD I NEED ASSISTANCE WHEN LOOKING FOR CAPITAL?
Navigating the commercial loan process can be a tricky endeavor. While some agents may have experience with getting a business loan, a large percentage of insurance agency owners we speak with only have experience in obtaining a home mortgage or vehicle loan. These types of banking transactions can vary dramatically from obtaining financing on an insurance agency.
Traditional banking outlets, such as your hometown bank, typically do not like to extend credit to an insurance agency because a significant percentage of the business’s value is intangible. Often, local bankers claim to be able to do SBA loans, but the loan officers themselves have little or no experience in completing SBA 7a acquisition loans – the type you will likely need.
The reality is that there are only a handful of lenders nationwide that understand the insurance business. Each one of these lenders has specific guidelines and underwriting processes that dictate the limitations on what they can do. One lender may be the best option for a certain scenario, and a poor option for another. Working with Patrick & Associates can save you considerable time, money, and frustration.
WHAT DOES YOUR PROCESS LOOK LIKE?
As with all our services, we walk our clients through a systematic process. The loan consultation has several steps, including:
1. Interview - Schedule a call so that we can obtain high-level details on your insurance agency and determine what you are looking to accomplish both short and long term.
2. Data Collection and Analysis - If we feel that we can assist you in securing financing, we will request information about your insurance agency, review it with you, and put together a prospectus to be shared with lenders.
3. Review Available Options - Once the prospectus is complete, we will discuss the options available to you and work directly with the lenders to obtain quotes for your capital needs.
4. Underwriting Approval – We will assist you with gathering documentation and answering questions requested by the lender to complete their underwriting review.
5. Closing - Finally, we will help you review the loan documents so that you understand the terms and your post-closing obligations.
Proposal
We want to hear details about your upcoming acquisition or perpetuation so we can design a loan package that meets your needs. The sooner you give us a call, the better. Following our initial conversation, we’ll begin the qualification process and send you the application, gather your tax returns, resumes, business plan, projections and other information. We’ll help you build out a budget. Once we have your completed documents, you can expect pre-approval notice within 48-96 hours. Then, you’ll receive a proposal including information on rates, terms and any collateral requirements.
Underwriting and Closing
Once you sign and return your proposal letter, underwriting takes approximately two weeks. Upon approval, you’ll receive a commitment letter and your loan will be assigned to a closing specialist at the bank. On average, it takes 45 days to have cash in your hands. We make it a priority to meet your timeline expectations, so we will work with you to complete the acquisition or perpetuation loan process as quickly as possible.
Post-Closing
After your loan closes, we will introduce you to a dedicated business analyst at the bank who will work with you throughout the life of your loan. He or she will perform a quarterly financial analysis, answer any loan questions and make recommendations to strengthen your agency’s financial status. We measure our success by the success of our customers, so we’ll have your back throughout the life of your loan.
We work with banks who understands the value of your future commissions. We recognize you as an independent business owner. Like any private business, there are times when you will need to access capital, but unlike many business owners, you have a valuable asset to leverage: your future renewal commissions. Our partners offer loan products by using your future commissions as collateral...often your typical bank will not do. Other financial service providers under-value this asset because of their inability to predict policyholder behavior. Our model is unique. We have the historical experience, modeling capability, and financial wherewithal to provide you with the capital you need using the full value of your renewal commissions. Our Agency Finance team can help your agency strengthen its competitive position by increasing your working capital, helping you acquire an agency, consolidating existing debt, or helping you transition your business to the next generation. Let us put the value of your book to work for you.