Worried about what you will need to provide to apply for an Agency Finance business loan? This helpful guide will provide you with the basics of what you will need to provide in the loan application process.
What will First Mid Bank & Trust Agency Finance ask for?
The following information will be requested at the time of the initial application. This information will generally allow us to narrow down pricing and loan terms.
- Completed Loan Application — the loan application requests basic information about your agency, its owners, existing business debt, and the type of loan you are looking for.
- Tax Returns — business and personal tax returns for the last two years. Generally, agencies are single owners or closely held, so we look at both the business and its owner’s financial and credit profile.
- Personal Financial Statement (PFS) — the PFS is a summary of an owner’s financial profile. It will include a summary of annual income and expenses. It will also include the assets (cash, investments, property etc.) and liabilities (mortgages, auto loans, student loans, credit cards etc.) of the owner.
- Revenue Summary — the revenue summary will ask you for a high level view of your commission revenue, including the annual revenue for your primary insurance companies you work with, the types of products you are writing and how your commissions are paid.
- Interim Business Financial Statements — balance sheet and year-to-date income statement near the application date.
What else may be required?
In order to complete our underwriting, we may need some or all of the following:
- Contracts/Agency Agreements with insurance companies — we need to review your signed agreements with insurance companies specifically, the provisions related to commission payments. This includes the compensation/rate schedules that may be addendums to your agreements.
- 1099’s and/or Commission Statements — in order to validate commission revenue from your application and financial statements, we need to compare it to your 1099’s and commission statements.
- Insurance Licenses — we will want a copy of any insurance licenses you hold.
- Organization Documents — unless you are an unincorporated sole proprietor, we will want to see a copy of the Articles of Incorporation/Formation/Organization, and related Bylaws and Operating Agreements, as applicable. These are simply the docs you completed when you formed the company.
- Driver’s License — we will need a copy of your driver’s license to verify your identity.
What else will we be looking at?
Here are a few items you should check prior to application. These are items we will review during the underwriting process, and if we don’t know these at the time of application, it sometimes can delay the process. So it’s always a good idea to check these items ahead of time so your loan application is not delayed.
- Tax Liens or Payment Agreements — be prepared to tell us about any outstanding tax liens or payment agreements you may have for prior year’s taxes.
- Good Standing — if you are incorporated, check with the secretary of state’s office in your state to ensure that your business is still in good standing, which typically means you have paid any outstanding fees and filed annual reports if necessary. Each state differs on the requirements but you can normally check this quickly by searching your business name on the state’s web site.
- Other Liens on Business Assets — make sure you disclose any liens on the business assets or commissions in the application. Generally we will require that any other liens on business assets or commissions are released or subordinated, normally through pay off of the related debt. If you are unsure whether any such liens exist and want to check, you can do a UCC search for your business with the secretary of state office. We will do a similar search during the underwriting process, so it’s not necessary for you to do the search.
The information presented is meant as general guidance on what documentation may be expected in the loan application and underwriting process. It is not intended to be a comprehensive list of everything that may be required for your business loan as each situation and borrower are different.
Get a quote with an account manager, or call us at 877-894-2785.
