Insurance Agent Loan, LLC

September 15, 2013



Premium Finance Associates and Springtree Capital have combined resources forming Insurance Agent Loan, LLC. IAL will offer a wide array of funding to insurance agents for acquisition, succession planning and debt consolidation. Loans range from national lenders, offshore lenders and private equity.

Bill Friend, President of PFA – Premium Finance Associates – says "Our partner Sam Patterson has closed over 4,000 loans in the past 10 years through his unique access to SBA lending. Once the loan is packaged, it is shopped to over 17 national banks – three at a time – until the best offer is accepted." Success ratio is unprecedented through the SBA which can offer as low as 5% APR amortized over 10 years without pre-payment penalty.

Insurance Agency loans range from $25,000 to $13,000,000 with the median loan at $650,000. Sam Patterson adds "agencies with property can fund up to 13mm over time whereas straight books can fund up to 5mm. This program offers the capability to continually acquire books of business as many agents near retirement. Once approved through the SBA, it becomes a turn-key operation based on cash flow." The SBA program has really caught on for the agent needing a minimum of $300,000.

IAL also offers lending to the smaller agent whereby one or more carrier commission streams are deposited into a mutually owned account, controlled by the funding source, where the initial principal and interest is captured. Any commissions over and above the P&I are swept back into the agent’s account. These loans are typically amortized between 5-8 years – but are subject to pre-payment penalties.

Offshore lenders in Jakarta and New Zealand do not scrutinize the loan on the credit score of the individual owner as do US lenders, but rather on the cash flow of the agency. The soft market and recent economy have put agency owners at risk with regards to personal credit. Some owners have had to dip into personal savings and put their credit at risk in a negative to zero growth in certain regions of the country. "We have solutions for most agents" says Bill Friend.

Bill Friend also owns several small companies including Premium Finance Group where PFG finances life insurance policies for high net worth individuals as well as COLI – Company Owned Life Insurance. PFG offers 5mm or more death benefit with little or no out of pocket expense using several proprietary products such as RED – Real Estate Direct. "We mainly use real estate and securities to offset the cost of annual premium," says Friend. Our securities product allows individuals to pledge public and private stock and should the stock as collateral."

Premium Finance Associates also allows insurance agents to increase and diversify their income streams. Agents sell to commercial and retail outlets. Banks have decreased or eliminated lines of credit to the retail and commercial sectors. "We offer factoring for the agent's commercial accounts where businesses can get up to a 90% advance against their receivables to replace their lost lines of credit." PFA also offers the retail sectors, especially restaurants, the capability to get advances against future credit card sales. Agents make 25% of the profit which can double their commissions over 12 months.

Contact information:
Bill Friend, Principal
7603 First Place Dr., B-12
Cleveland, Oh. 44146
866.374.3630 (office)
866.839.3090 (fax)
216.225.4321 (cell)

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