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Smart Strategies to Finance Insurance Agency Growth

One of the most exciting aspects of owning an independent insurance agency is growing the business. Building a solid team and expanding operations are gratifying experiences that make the long hours and effort needed to establish a strong client base worthwhile. But, growing an agency is not without its challenges, foremost of which often is finding the necessary capital for expansion. Learn where to look–and where not to–for the funds to grow your business.

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What Does It Take to Qualify for an Agency Loan?

Whether they want to hire new producers, launch a marketing campaign, buy a book of business or transfer the agency to a family member, an agency owner generally will need to arrange an agency loan to fulfill their plans. Since most insurance agencies have limited access to capital from banks, working with a broker who has connections to multiple specialty lenders is a smart solution. Rather than asking the agency owner to put up personal assets or real property as collateral, these lenders can put together loan packages based on three primary criteria…

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Why You Need a Perpetuation Plan

Many independent insurance agency owners build their business with the goal of selling the agency when they reach their 60s or 70s and using the proceeds to fund a comfortable retirement. But what happens if things don’t go as planned? A downturn in the business market—or worse, the death of the owner—can force an unplanned or unfavorable sale, which could have a negative impact on the owner, owner’s heirs, or agency employees.

The 2014 Future One Agency Universe Study estimates that 14 percent of independent agencies do not have a perpetuation plan in place, although industry insiders believe the number is much higher. Often, agency owners are so focused on managing the day-to-day business that they don’t consider what the future may hold. Here are three approaches to business perpetuation planning that can help ensure that your independent agency continues when you are no longer at the helm, and also ensure that you get the most value from your business while facilitating a smooth transition to new ownership.

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