How to Get Business Loans for Insurance Agents

Guide to Business Loans for Insurance Agents

• Best Insurance Agent Loan for Value: SBA Loan

  SBA loans are widely regarded as the best business loans available. They have desirable terms: repayment terms between seven and 25 years, relatively low interest rates, and high capital amounts. You may want to consider an SBA loan—particularly, an SBA 7(a) loan—for things such as general working capital and commercial real estate upgrades.

  Of course, you can’t just get an SBA loan if you want it; these loans are only given to the strongest candidates due to their desirability. Having a strong financial profile will make a big difference—that means a few years in business, strong revenue, and a very-good-to-excellent credit score.

  If you’re a new business just starting up, you may also want to look into SBA Microloans. Although they only furnish capital up to $50,000, they’re purposely made for newer companies or expanding companies, especially those with very small teams (or even just solopreneurs).

  It’s important to note that these are the snail mail of business loans, in the sense that they take quite a while to finance (at minimum 60 days). If you’re looking for quick capital, you’ll want to move on to a different type of loan. But if you have the chance to wait, it’s worth looking into SBA loans because of their relatively low cost.

• Best Insurance Agent Loan for Flexibility: Business Line of Credit

  You may be interested in the ultimate flexible loan, which is a business line of credit. A business line of credit enables you access to cash by “drawing” from a credit line that you have secured from a lender. As you need money, you can borrow against the credit line and funds will show up in your business bank account for use. Some lenders even often a debit card for instant access to your credit line.

  There are two other big benefits to a business line of credit. The first, and maybe best, is that you only have to pay interest on the amount of the line that you use. For instance, if you’ve been approved for $250,000, and you only draw $50,000, then you don’t have to pay interest for that extra $200,000—it’s capital that’s waiting in the wings for you to access as you need it. Additionally, once you repay that $50,000, you’ll have access to the full $250,000 to borrow against again. That’s the other big benefit; it’s called a “revolving” line of credit.

  If you qualify, you can get approved for a business line of credit relatively quickly—sometimes, in as little as a single day.

• Best Insurance Agent Loan for Cash Flow: Invoice Financing

  As an insurance agent, it’s very possible that you work on trade credit, which means that you enable those whom you invoice a period of time before their invoice balances come due. That’s good for business, but tough for cash flow if you have a lot of outstanding invoices at once.

  With invoice financing, a lender will front you 85% of your invoice amount so you can access the capital tied up in the invoice ASAP. Then, when your customer pays up, the lender will return the remaining 15% minus their fees.

  Of course, it’s a difficult pill to swallow, thinking about taking a bite out of your revenue. But if your cash margins are low, and it’s the difference between paying your staff and keeping your lights on, it’s a fair price to pay.

  A great thing about invoice financing is that you can get approved for this type of business loan rather quickly. Sometimes, it just takes a day.

• Best Insurance Agent Loan for New Gear: Equipment Financing

  Equipment loans aren’t just for big manufacturing businesses. If you’re looking to overhaul the furniture in your office, or purchase new technology setups, you may be able to access equipment financing.

  With this type of business loan, you get a quote for the equipment you’re looking to finance. Then, you bring that quote to the lender, who will front you the money for the purchase if you’re approved. These loans are what’s called “self-collateralized,” which means that the equipment you’re financing with the loan becomes the collateral itself. For this reason, business owners with slightly lower credit scores, or newer businesses without a great deal of credit history, may be able to qualify.

  These loans are also quick loans. It may only take a couple of days for you to obtain your financing to purchase your equipment. That said, these loans are obviously not as flexible as other loans, but for the purpose of purchasing new gear, they’re ideal.

• Best Insurance Agent Loan for New Businesses: 0% Introductory APR Credit Card

  It may be strange to think about a business credit card as a type of business loan. But, used strategically, it can be a great financing tool for your growing business. Particularly, look at 0% introductory APR business credit cards.

  With these types of cards, financial institutions offer a fixed period during which you don’t have to pay interest on any balance you carry. Many times, these periods are more than a year. After that, a standard APR based on your creditworthiness and the market Prime Rate will kick in. But, if you’re smart about spending and paying down your balance before the intro period is up, you can use these cards as interest-free financing for all different types of expenses.

  You’ll also want to note that you may be able to transfer an existing balance to a business credit card with a 0% introductory APR period. That can make your credit card debt less expensive for that period (as it’s not accruing interest).

  And, as you likely know, if you’re qualified you can be approved for a business credit card in a very fast time window.