What are Allstate Insurance Agency Loans?
An Allstate insurance agency loan is a business loan that may be used to grow or purchase an existing Allstate Insurance Agency book of business. Not unique to Allstate Insurance Agencies, working capital is often required because of when premiums are renewed and the frequency of commission payments. Between regularly scheduled commission payments, the timing of renewals and bonus, an Allstate Agent needs adequate income if you plan to meet financial commitments to your employees and your agency.
The universe of small business loans can be scary in case you’re searching for business loans for the first time. There are many choices accessible, each with various upsides and downsides. We’ll help demystify how to get a business loans for your Allstate Insurance Agency, discuss the most suitable alternatives out there and better understand the reasons why an increase in working capital may bode well for your business. We’ll also discuss what you need to apply for a small business loan, what you may experience along the way, and more.
Business Loans for Allstate Insurance Agents
Most conventional moneylenders are reluctant to make loans to Allstate Insurance Agents since they neglect to see the true value of the business with this kind of borrower. They take a gander at your financial records and business history, however, neglect to see the capability of your business. As a Captive Allstate Insurance Agent, you are consistently searching for a way to subsidize agency growth and expand your business, yet you have few choices when it comes to financing options for your Allstate Agency.
This shouldn’t be so. Your business is continuing to grow and develop and for good reason. The insurance industry has something others don’t; an expanding base of possibilities, a huge shopper interest for insurance, social and financial swelling that builds premiums, and 50 years of continuous recorded development in premiums. Still, as a cash flow business, an Allstate Insurance Agent must constantly be on the lookout for ways to expand your agency by increasing cash flow. This often requires making an investment in staff, training, marketing or other services that may not see a return on that investment immediately. The good news, in today’s lending market, there are more lending options than ever to that you can utilize to grow your Allstate Insurance Agency.
SBA Loan
Small Business Administration (SBA) loans are broadly viewed as the best business loans accessible for small business owners. They have attractive terms: reimbursement terms somewhere in the range of seven and 25 years, moderately low-financing costs, and high capital limits. The problems is, you can’t simply get an SBA loan if you need it; these loans are given to the most grounded businesses due to their attractive quality to banks.
Having a solid financial profile will have a major effect—that means a couple of years in business, solid income, and a generally excellent-to-phenomenal FICO credit score. If you’re just getting started, you should investigate SBA Microloans. Even though they only offer up to $50,000, they’re deliberately made for a business to start-up and expand. Unfortunately, the average SBA microloan is around $13,000 and most likely not enough to fund your Allstate Agency’s grown strategy.
Business Credit Cards
While credit cards are used by some entrepreneurs to finance expansion, they regularly hit the borrower with a lot higher loan cost than most other options. Even though they are a simple alternative to access and utilize, you will be paying a lot more money over time in interest and fees when compared to other options. Also keep in mind, that unlike some business lenders who lend specifically to Allstate Insurance Agents, these credit cards can severally affect your personal credit score making it difficult or impossible to finance other large purchases (e.g. vehicle, home, etc.) in the future.
Alternative Lenders
Many alternative lenders have a loan options that may accommodate your working capital needs. Like banks, many of these lenders focus on small business loans and personal loans that require you to pledge some of your assets (e.g. primary residence) in order qualify; there are other lender that focus solely on lending insurance agencies. The largest and probably most well know is Oak Street Funding which is owned by First Financial Bank. These larger alternative lenders offer financing products to most insurance agencies and other financial service providers. Many, including Oak Street charge $500 or more to submit an application to underwriting before you’re approved for your loan. That money is typically non-refundable regardless of whether you end up taking out the loan with them or not. Another major playing in the market that focus solely on lending to Allstate Insurance Agents is McQue Capital. Unlike some of the larger lenders, there’s no application or underwriting fee and since they provide the loan directly to your business there is no impact to your credit score unless you’re using the loan to pay off personal debt you used to finance your Allstate Agency, in which case you should see a major improvement.
Regardless of the lender, the application typically centers around the general strength of your business and the current cash flow of your Allstate Agency. Once you submit your application and supporting documents what used to take weeks or even months can now be done completely online in about a few days.
The best part about working with an alternative lender who works specifically with insurance agencies, specifically Allstate Insurance Agents, is that they typically have a better understanding of your business and are able to approve the loan despite good or bad times your agency may have experienced in the over time.
If you’re not interested in the investment of the time and resources or apply for a bank loan, alternative lenders offer competitive terms and typically don’t require you to pledge any of your personal assets as collateral for the loan.
What to Apply for Business Loan for Insurance Agents?
Lenders require different documentation depending on the type of loan you’re applying for. Banks and SBA loans will typically require substantially more financial history to support your application and is often compared to applying for a mortgage or home loan. If you’re looking for a quicker turn-around by working with alternative lender for your Allstate Insurance Agency, this is what you should be ready to submit along with your credit application:
- Personal Financial Statement
- Tax Returns
- Allstate Reports
Luckily, many of the alternative lender who focus on lending to Allstate Insurance Agents have streamlined their online application process to you should be able to submit each document quickly and efficiently.
In case you’re contemplating applying for an SBA loan, here’s a shortlist of what you might need:
- SBA Form 413, Personal Financial Statement
- SBA Form 1919, Borrower Information
- SBA Form 912, Statement of Personal History
- 3-years of Personal and Business Tax Returns
- Business Plan
- Cash Flow Forecast
- Balance Sheet and other Accounting Documents
- Business License
- Loan History and Credit Report
The SBA has a more detailed list of the documents you’ll need to complete in order to apply for the loan and each SBA bank/lender may have additional requirement in order to approve your loan. While banks, credit unions and alternative lenders all offer loans to small businesses and insurance agencies, the amount of up-front time and money is often a major factor in where Allstate Agents like you decide to apply for a loan. While banks and credit unions often seem like the obvious place to turn for a loan, when it comes to a loan specifically for your Allstate Insurance Agency, alternative lenders are likely to approve your application based on their understanding on your business and the industry and often a lenders who focus solely on loans to Allstate Insurance Agencies (e.g. McQue Capital) can help guide you through the process.