I haven't anty luck with local banks, and the book is too small (750,000 annual prem) to get financing through PPC or allstate. The only place that said they would take it is Oak st funding and there rates, fees, etc are really HIGH. Any advice would be helpful. Current agent is willing to self finance up to half...and he is asking 175,000k, but I think I can get him down to around 150,000.
Help!!! Need Financing for Purchase of Existing All State Agency
- Thread starter haftops
- Start date
- 15,041
Re: Help!!! Need Financing for Purchase of Existing All State Ag
So he is willing to sell it to you for little more than one year's revenue? Why such a low price?
So he is willing to sell it to you for little more than one year's revenue? Why such a low price?
- 1,076
Re: Help!!! Need Financing for Purchase of Existing All State Ag
I know that Oakstreet Funding is somewhat expensive... but they and insurbanc are about the only lenders that will lend based off of expected future commissions. Most lenders only offer collateral based loans. Lending based off of future commissions puts the lender in a risky position (no collateral) so they expect a higher return than you see with traditional loans. I would see if insurbanc offers a better loan package than Oakstreet... because Oakstreet will often drop their rates and terms if there is competition. If you have a relationship with a premium finance company like First Insurance Funding... they might be an option.
I know that Oakstreet Funding is somewhat expensive... but they and insurbanc are about the only lenders that will lend based off of expected future commissions. Most lenders only offer collateral based loans. Lending based off of future commissions puts the lender in a risky position (no collateral) so they expect a higher return than you see with traditional loans. I would see if insurbanc offers a better loan package than Oakstreet... because Oakstreet will often drop their rates and terms if there is competition. If you have a relationship with a premium finance company like First Insurance Funding... they might be an option.
insurance123
Expert
- 38
Re: Help!!! Need Financing for Purchase of Existing All State Ag
I applied with Oakstreet about a month ago. Works a little different however b/c I own a brokerage. I have about $3 million on the books but they wouldn't count business from wholesalers. A large part of my business is fire departments and they also would not count the future commissions on this as they don't like specialty carriers. You'll also need to be careful if you already have a loan out there as they may require you to roll that over. Check your UCC1 filing. Any other brokers out there with experience on this?
I applied with Oakstreet about a month ago. Works a little different however b/c I own a brokerage. I have about $3 million on the books but they wouldn't count business from wholesalers. A large part of my business is fire departments and they also would not count the future commissions on this as they don't like specialty carriers. You'll also need to be careful if you already have a loan out there as they may require you to roll that over. Check your UCC1 filing. Any other brokers out there with experience on this?
RenegadeAgent
Expert
- 30
Re: Help!!! Need Financing for Purchase of Existing All State Ag
Any way to get the owner to finance the whole thing? Maybe give him a higher price to sweeten the pot.
Any way to get the owner to finance the whole thing? Maybe give him a higher price to sweeten the pot.
Re: Help!!! Need Financing for Purchase of Existing All State Ag
have you try getting a loan form SBA?
- 1,076
Re: Help!!! Need Financing for Purchase of Existing All State Ag
Probably your best bet at this point. They owner probably does not have too many options at this point. Offer an earn out of 40% of renewal commission over 4 years and see what he says.
Probably your best bet at this point. They owner probably does not have too many options at this point. Offer an earn out of 40% of renewal commission over 4 years and see what he says.
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