Use an SBA Loan to Acquire an Independent Insurance Agency

Before approaching lenders, establish your target agency profile: minimum $300K EBITDA, carrier appointments with A-rated carriers, retention rates above 85%, no single client over 10% of revenue, and licensed staff committed to staying post-close. Confirm you meet SBA borrower eligibility — including relevant industry experience or licensing — and get a preliminary sense of your personal financial position (liquidity, net worth, credit score) to understand what purchase price range is realistic given the 10%–20% equity injection requirement.

Not all SBA lenders understand insurance agency deals. Seek out lenders with a documented history of closing agency acquisitions — they will understand how to underwrite goodwill, evaluate carrier appointment transferability, and size the loan against commission income. Community banks, regional lenders, and non-bank SBA lenders (like Live Oak Bank, Byline Bank, or Newtek) are active in this space. Present your acquisition criteria, financial profile, and a target deal or Letter of Intent if you have one. Request a term sheet and confirm the lender's appetite for insurance goodwill financing.

Source acquisition targets through insurance-focused M&A advisors, industry brokers (IIABA marketplace, Agency Brokerage Consultants), direct outreach to retiring agency owners, or PE platform referrals. Once you identify a target, conduct preliminary due diligence on financials and book quality, then execute a non-binding Letter of Intent (LOI) specifying purchase price, deal structure (asset vs. stock purchase), earnout or seller note terms, and a 60–90 day exclusivity period for full due diligence and SBA loan processing.

This is the most critical phase for insurance agency acquisitions. Review trailing 3-year policy retention rates by line of business, carrier appointment agreements for assignability and consent-to-transfer requirements, top 20 client concentration analysis, all producer employment agreements and non-competes, E&O claims history and current coverage, licensing compliance for all staff, contingency income history, and the agency management system data quality. Engage an insurance-experienced CPA to recast the financials and confirm true owner discretionary earnings. Flag any carrier contracts that require advance consent before assignment — these can delay closing by 30–60 days.

Work with your SBA lender to compile the full application package: 3 years of business tax returns for the target agency, year-to-date profit and loss statement, balance sheet, owner's personal tax returns and financial statement, business plan and post-acquisition projections, purchase agreement or draft asset purchase agreement, business valuation (required for SBA deals over $250K in goodwill), and evidence of carrier appointment transferability. The lender will order an independent business valuation if not already provided. Submit the complete package and respond promptly to any SBA or lender conditions.

Simultaneously with SBA underwriting, initiate the carrier consent-to-assign process for all key appointment agreements. Some carriers require 30–90 days advance notice and may conduct their own review of the acquiring entity's qualifications. Work with the seller and your attorney to submit consent requests to all carriers, track responses, and identify any carriers that may require re-appointment rather than assignment. Ensure all staff license transfers, new entity formation, E&O policy placement for the acquiring entity, and lease assignments are completed before the scheduled closing date.

At closing, the SBA lender funds the loan, the seller receives proceeds (minus any seller note held back), and ownership of the book of business and agency assets formally transfers. Execute a structured 90–180 day transition plan with the seller covering client introductions, carrier relationship handoffs, and staff onboarding. Monitor policy retention rates closely in the first two renewal cycles — these results will determine earnout payments if applicable and validate the quality of the book you acquired.