The SBA 504 loan is designed to help you buy real estate and buildings, or construct a new building. You can use them to improve the land and buildings purchased, and for any equipment that you might need, as well as certain soft costs involved with the project. Most insurance agents will qualify for an SBA 504 loan, as well.

For more information, please see SBA 504 Loans for Insurance Agencies.

An SBA 504 loan can help insurance agencies establish themselves in a market by providing funds to buy real estate and buildings, or construct a new building. They come with lower interest rates than SBA 7(a) loans and can be used to improve the land and buildings purchased, and for any equipment that you might need, as well as certain soft costs involved with the project.

Source: SBA 504 Loans for Insurance Agencies

The steps involved in applying for an SBA 504 loan for an insurance agency are as follows:

• Verify Eligibility: The first thing you must do is make sure that you are eligible for the program. Note that there are quite a few reasons for disqualification, including defaulting on student loans by a major owner within the business, criminal history, owning too many assets, and poor credit.
• Check Your Credit: Note that the SBA has no credit requirements. However, the lender that you work with will. We discuss credit in the section of this site dedicated to SBA 504 loan rates.
• Find a Lender/CDC: The next step can go one of two ways depending on your desires. You need to find either a lender that offers 504 loans, or a CDC in your area that can connect you with such a lender.
• Pre-qualification: Before you start completing your SBA loan application, you should get prequalified. Your CDC or lender can do this for you. To prequalify you, the CDC will need:
  • Three years of personal and business tax returns
  • Interim financial documents
  • A personal financial statement
• Decide on Your Purchase: With the pre-qualification in hand, you can begin looking at purchase options, vetting contractors, comparing equipment choices, and more.
• Complete the Application: Once you’ve decided on what you’re purchasing and have been prequalified, you can begin the application process. You’ll work with your CDC and/or lender to complete a full SBA loan application. You will also finalize what you are seeking in loan terms at this time. There are quite a few things that will be addressed during the application process, although some will have been touched on during pre-qualification. These include:
  • Your creditworthiness
  • Your business’s eligibility for the 504 loan program
  • Your business’s current level of indebtedness
• Find a Lender: If you have not already done so, you will need to find a lender that offers 504 loans. The loan application can be downloaded from the SBA as a PDF file here.

When applying for an SBA 504 loan for an insurance agency, you will need to provide the CDC and your lender with a wide range of documentation. The most commonly required documents include:

• Business tax returns for the previous three years
• Personal tax returns for the previous three years
• Personal history statement
• Personal financial statement
• Personal budget analysis
• Business financial statements for the previous three years
• Business debt schedule
• Revenue and expenses breakdown for the past year (month to month)
• Occupancy percentage and average daily rate information for the previous year (month to month)
• Occupancy percentage and average daily rate for the area
• Your hotel projection worksheet
• Interim financial statement (signed and dated, and including balance sheet and income statement dated within the previous two months)
• Accounts receivable aging (dated within the previous two months)
• Accounts payable aging (dated within the previous two months)
• Complete business plan
• One year of financial projections with assumptions
• Purchase agreement
• Written estimate from a contractor if the loan is for construction
• Letter of intent from the franchisor and a FUOC and franchise agreement (if applicable)
• Gift letter (if applicable)
• Previous government financing schedule
• Environmental impact questionnaire
• Application certification an authorization
• Documents pertaining to the ownership of other businesses and their finances (if applicable)
• Copy of loan agreement and SBA authorization if you have another SBA loan (if applicable)
• Copy of the original debt documentation (if refinancing a loan)
• Your original purchase agreement, including settlement sheet (if refinancing a loan)

For more information, please visit https://sba504.loans/application-checklist.

SBA 504 loans have repayment terms of up to 20 years, depending on the amount of the loan and the type of project. The loan can be used to purchase real estate and buildings, construct a new building, improve land and buildings, and purchase equipment. Interest rates are typically lower than SBA 7(a) loans.

For more information, please see https://sba504.loans and https://sba504.loans/rates-and-costs/.