Why use Providence Bank Agency Finance?
Our Agency Finance group at Providence Bank specializes in lending to insurance agencies of all types and sizes. Our Agency Finance directors have been providing capital to the insurance market since 2003. We understand the unique business you are in, and unlike other banks, we understand the value of your future commissions. Using that value, we help accelerate your success by providing the capital you need.
Who will you lend to?
We lend to established insurance agencies and agents with a minimum of three years in the insurance industry. You need to own your book. If you’re an Allstate agent, we like to see you vested in your TPP. If you are an independent agent, revenue for the agency needs to have had a minimum of $250,000 in annual revenue over the last two years.
How much can you lend?
How much we can lend depends on several factors, some of which include the amount of your commission revenue, the insurance products you sell, the financial profile of the agency including how much excess cash flow is available to service the debt, and the financial profiles of the agency principal(s). Our minimum loan amount is $50,000.
What term lengths do you offer?
We can do loans with a maturity of up to 10 years for independent agents and up to 15 years for Allstate agencies. Working capital loans are generally on 5 or 7 year terms.
Can you do a line of credit?
Yes. We provide annually renewable lines of credit where you can borrow what you need when you need it, repay it and re-borrow again. Our lines of credit are interest only until the maturity date. At maturity, we can explore the option of renewal of the line, converting the amount to a term loan or repaying the balance outstanding.
What is the interest rate?
Interest rate will be dependent on several factors including the financial profile of the agency, the financial profiles of the agency principal(s), and the loan amount needed as a percentage of your revenue.
Can Providence Bank fund an acquisition?
Yes, we can fund an acquisition of another agency or a book of business using the seller's commission revenue, your existing revenue or some combination thereof. Using the seller's book helps minimize the impact on cash flow of your existing business.
How long does the process take?
The timeline is very dependent on how quickly you can provide us with the required information but generally ranges 30-45 days. Acquisitions may take longer than our average depending on where you are in the due diligence process on the purchase. Our Allstate Quick Application can take as few as three weeks from start to finish.
What's a Quick App?
Our Allstate Quick Application is exclusively for Allstate agents that allows us to underwrite your loan with just a few items from you. We need a completed application and three reports from your Allstate dashboard (Most Recent Monthly Compensation Statement, TPP statement and Business Metrics Report). No tax returns or personal financial statement are necessary. The Quick App program is limited to loans up to $500,000 that are less than your vested TPP value. The maximum amount we can lend you is dependent on your credit score. Our Quick App process can take as few as three weeks from start to finish.
How can I use the loan proceeds?
Loan proceeds must be used for business purposes such as general working capital, advertising and marketing, technology investments, hiring, consolidation or refinance of existing debt, acquisition capital or other business needs.
What's the collateral for the loan?
We utilize your agency’s commission revenue as the primary source of collateral for the loan along with a general lien on all business assets and a personal guaranty from owners.
What's a redirect of commissions?
A redirect of commissions is just a change in where the insurance company deposits your commissions. Each carrier has a Change in EFT Form or provides the ability to make a change to the deposit account on the agent portal of their website. So essentially, you redirect all or a portion of your commissions so that they are payable directly from the insurance company to a controlled bank account in your Agency’s name at Providence Bank. The amount of commissions that are redirected is determined based upon several factors including the size of the loan compared to your total net commission revenue. If you’re Allstate, the redirect comes in the form of Allstate’s commission assignment.
What happens to the commissions that get redirected?
The controlled bank account will receive commission deposits from the insurance companies and capture up to the amount of the monthly payment due on the loan. Once the monthly payment threshold is reached, any commissions deposited thereafter each month are swept daily to an operating account at Providence Bank that you have full access to through online banking.
How do I make my loan payment?
Your loan payment gets made automatically by us unless you do not have sufficient funds in your account.
What if my credit is bad?
The primary source of repayment is your commission revenue, so although we look at your credit, it is one of many factors that contribute to our credit decision.
What information do you need?
In order to get the process started, we need to understand the type and size of loan you are looking for and need to get a snapshot of your business's financial performance and commission revenue. Upon review of that information, we can discuss potential loan terms. If you decide to proceed after the discussion of preliminary terms, we would begin gathering the required documents for our underwriting. The list of required documents can be found in Preparing for a Business Loan for your Insurance Agency on our Helpful Resources page.
Do you do SBA loans?
Although Providence Bank does SBA loans, our Agency Finance loans are not through the SBA program, they are traditional commercial loans.
How do I access my operating account funds?
You received login information and instructions after your loan funded on how to login to online banking to access your account. You can login to online banking to view your account activity and access funds. If you are having troubling logging in, contact our online banking group.