Hard time getting business loans?

Forbes recently reported on a study conducted by Pepperdine University, which revealed a gap between the number of small business that are enthusiastic about trying growth strategies and the number that have the capital to execute them. Only 46% of small businesses say they have the financial resources that are necessary to grow as they envision. Of the smallest companies with revenue less than $5 million, only 39% that applied for a bank loan in the prior three months of the survey actually succeed in securing one.

The main reasons banks reported turning applicants down was due to insufficient collateral and too much debt. Pepperdine’s survey also showed the businesses that did try to obtain financing often turned to credit cards, friends and family instead of seeking funds from a bank.

Insurance agencies that fall under the small business category should be informed about other financing options. To fulfill agency needs for capital, nontraditional lending sources like Oak Street Funding can extend affordable credit to businesses secured by collateral that might otherwise be ineligible for traditional bank loans. Although they are concerned about managing risk and avoiding losses like banks, they are not required to adhere to the same regulations. As a result, nontraditional lenders can help insurance agents tap into their most valuable asset for collateral –  their commissions.

Commercial lenders like Oak Street offer different types of loans, including ones with variable and fixed rates, tend to have more flexibility in how loans are structured, and develop lending models that specifically address agent and broker needs. Fortunately for insurance business owners, niche lenders are typically have deep knowledge of the industry, firmly grasp how agencies and brokerages operate, and have the expertise determine how future commissions can be collateralized for a loan.

  • Was this Helpful ?
  • YesNo