Can I Refinance My SBA Agency Loan to a Fixed Rate Loan with No SBA Guaranty Required?

Can I Refinance My SBA Agency Loan to a Fixed Rate Loan with No SBA Guaranty Required?

Article By: Kimberly Bunce, SFB Relationship Manager

Contrary to what some financial institutions might tell you, an SBA guaranty on your agency loan is not an automatic requirement at all financial institutions. Here's why:

Most banks will look at your agency's balance sheet to determine what collateral is available in order to secure a commercial loan with them. However, insurance agencies are different than typical businesses as most agency's balance sheets show few assets besides cash, equipment, and maybe real estate. Your biggest asset - the current value of your book of business - doesn't show up on an agency's balance sheet. Consequently, many banks consider there to be a lack of collateral to secure their loan and will require an SBA loan to help them offset the perceived collateral shortfall.

At Security Financial Bank (SFB), we are different than most banks. We understand the value of your book of business, and we are comfortable lending against it.  Because we place such a high value on your book, we seldom require an SBA loan as we believe your book provides adequate collateral to secure our loan to you.

If you have an existing SBA loan with another financial institution, we can pay that SBA loan off with a conventional loan without creating another SBA loan.  It often takes time to get an SBA loan approved and closed, and the restrictions, rules, and covenants required can be overwhelming.  Simplification has its advantages, and that is what we provide for our agency clients.

Because we have taken the time to learn the insurance business, we can customize a loan that fits your needs.  If you are buying another agency, we will place a value on your book of business and the book of the agency you are buying to determine the loan amount. If you are refinancing an existing loan, we will place a value on your book of business. We also can use your book of business to fund a technology upgrade or new agent hire -- also without an SBA loan requirement.

For more information, contact a member of our Insurance Lending Team for a free consultation. Schedule an appointment online or call 888.254.0615.

During her tenure with SFB, Kimberly Bunce has been involved in numerous insurance agency transactions, including partner buyouts, partner buydowns, and agency refinancing.  Kimberly's experience as a CPA and her attention to detail helped these transactions run smoothly.