Best Insurance Agency Business Loans Explained
In this section, we will provide an in-depth description of each loan type outlined in the table above. We will also explain the rationale behind our choice of recommended lenders for each type of insurance agency business loan.
A Small Business Administration (SBA) loan is an excellent way to obtain capital funds to start your insurance business. Since the government guarantees most of the financing, you will likely have a longer period to pay back the loan. The other benefit of an SBA loan is that the interest rates are typically lower. However, you will need to work through an approved lender.
You can purchase most of the items you need for your insurance agency using a small SBA loan. This type of loan can help you lay down the path to success in your first few years. If you manage to have a successful turnover in the initial stages of your insurance agency business, you might be able to settle your account sooner than expected. Fortunately, with an SBA loan you won’t suffer from any prepayment penalties if you do so.
As a verified SBA lender, SmartBiz also specializes in construction loans. If you need to develop a property or perform renovations to get the building up to scratch, they will help you get government-supported funding. SmartBiz also has an excellent reputation when it comes to finding financing solutions for your specific industry.
If you need equipment and machines more than you require fixed assets, you may want to look at equipment financing. Whereas SBA loans require down payments, lenders of equipment loans generally offer funds that cover the full value of the assets. You can use this loan whether you’re buying or leasing items. Also, equipment financing loans typically come with a generous repayment period.
You will likely need a lot of equipment to get your insurance agency started. Computer technology, printers, insurance software, and scanners are only a few examples of what you will require to get started.
Fundera is a hive of activity when it comes to loans, offering startup, SBA, and equipment financing. While you might approach it for machinery funding, Fundera will assess your situation and suggest the best loan solution for your insurance agency business. Fundera prides itself on being transparent in its dealings with its clients so you always know how much you owe.
If you’ve ever dealt with revolving loans, then a business line of credit’s system won’t be alien to you. The primary difference is that you won’t receive a lump sum, rather the funds will be available for you to draw money out as you wish. Also, you will only pay interest on the amount you use. A business line of credit will give you flexibility if you suddenly need cash for your insurance agency.
Every business needs a source of cash flow, including insurance agencies. A steady source of cash flow helps when there’s an emergency or you need to buy supplies at the local store. Ideally, you should try to keep such monthly expenses to a minimum and reserve your cash for emergency repairs or bills.
BlueVine has an excellent business line of a credit system, offering new companies up to $250,000 to get started. BlueVine raises the limit for loyal customers, and you can manage your funds via an online portal. They also offer competitive rates in comparison to other lenders.
Invoice factoring can give new businesses a boost. This loan is suitable when clients owe money to your business, and you need to cover your expenses in the meantime. Lenders purchase outstanding invoices while incorporating a factor fee as a means of payment. In this way, you have the assurance that you will recover your revenue, and you can continue with your operations as usual.
Clients have a habit of missing payments when times are rough. They don’t consider insurance a necessity until they need it, and so insurance payments often become the last item on their monthly budget. With invoice factoring, you can have the lender stress about obtaining the funds while you focus on paying your bills and wages.
Fundbox stands out as a great option for factoring even though, strictly speaking, it is an invoice financing company. Nevertheless, Fundbox is definitely an option that insurance agency businesses should look at for factoring, and it may even prove to be a better fit for you than typical invoice factoring.