Insurance brokers and agencies can get unsecured working capital three main ways: a merchant cash advance (MCA), a business line of credit, or an unsecured term loan. None of them requires real estate or equipment as collateral. Approval and pricing come down to three things: your personal credit, your agency’s monthly revenue (bank deposits), and how long you’ve been in business. The stronger those three are, the cheaper the money.
Here is how each option works for an insurance agency, what lenders look for, and how to pick the right one.
Why insurance agencies need working capital
An agency can be growing and profitable and still run short on cash. Common reasons:
- Commission timing. Carriers pay on their own schedules, chargebacks happen, and new-business commissions on monthly-pay policies trickle in over the year.
- Hiring producers. A new producer can take 6 to 12 months to cover their own salary.
- Buying a book of business or merging with a retiring agent.
- Marketing and leads, which have to be paid up front.
- Opening a new office, adding lines of business, or upgrading your agency management system.
- Seasonal swings, like Medicare open enrollment, ACA season or commercial renewals that cluster at certain times of the year.
Banks like agencies’ renewal income but often want two to three years of tax returns, strong profits and collateral. That’s where unsecured working capital comes in.
Option 1: Unsecured term loan
A term loan gives you a lump sum that you repay with fixed weekly or monthly payments. It’s the best fit for one-time uses with a clear payback, like buying a book of business, opening an office or funding a producer’s first year.
Bank term loan (lowest cost):
- Credit: 680+
- Time in business: 2 to 3+ years
- Bank deposits: $50,000+ a month, no NSFs, no prior defaults
- Documents: full financial package (tax returns, financial statements)
- Term: 3 to 5 years, monthly payments
Non-bank term loan (faster, easier to qualify):
- Credit: 600+
- Time in business: 12+ months
- Bank deposits: $20,000+ a month, no NSFs, no prior defaults
- Documents: application and recent bank statements
- Term: 12 to 24 months, weekly or monthly payments, renewable once about half is paid down
Learn more about business term loans and unsecured business loans.
Option 2: Business line of credit
A line of credit is the best tool for the commission-timing problem. You draw what you need, pay interest only on what you use, and the line is available again as you pay it down. Use it to cover a slow month, a chargeback or a marketing push, then pay it back when commissions come in.
- Credit: 650+
- Time in business: 12+ months
- Bank deposits: $25,000+ a month on average, no NSFs, no prior defaults
- Lines up to $500,000, renewable every 12 months
- Interest-only monthly payments on the amount drawn; at renewal you can renew, pay off, or term out the balance over 3 to 5 years
See how our business lines of credit work, or compare a line of credit vs. a loan.
Option 3: Merchant cash advance (revenue-based funding)
An MCA is an advance against your future deposits. It’s the fastest and easiest to qualify for, and the most expensive. It makes sense for a short-term opportunity that pays back quickly, or when credit keeps you out of a line of credit or term loan.
- Credit: about 500+ (stronger credit gets better pricing)
- Time in business: usually 6+ months
- Revenue: $10,000+ a month in steady deposits
- Amount: often up to about 100% to 150% of a month’s average deposits
- Cost: a factor rate, typically 1.10 to 1.50 (for example, $50,000 at 1.30 means you repay $65,000)
- Repayment: fixed daily or weekly debits over about 2 to 24 months
- Funding: often within 24 to 48 hours with a one-page application and 3 to 4 months of bank statements
Read more about how a merchant cash advance works.
Which option fits your agency?
| Term loan | Line of credit | MCA | |
|---|---|---|---|
| Best for | Book purchase, new office, hiring | Commission gaps, ongoing needs | Fast, short-term needs |
| Typical credit | 600+ (680+ bank) | 650+ | 500+ |
| Time in business | 12+ months (2–3+ years bank) | 12+ months | 6+ months |
| Monthly deposits | $20K+ ($50K+ bank) | $25K+ | $10K+ |
| Cost | Low to moderate | Low to moderate | Highest |
| Speed | Days (weeks for bank) | Days to weeks | 24–48 hours |
Guidelines vary by lender and are subject to approval.
The truth about MCAs for insurance agencies
MCAs get a bad name, and sometimes they deserve it. Used the right way, an MCA is a fast bridge. Used the wrong way, it’s a trap. A few rules:
- Know the real cost. A 1.30 factor rate paid back over 6 months costs far more per year than a line of credit. In California, providers must give you a cost disclosure for commercial financing offers of $500,000 or less. Read it.
- Don’t stack. Taking a second and third advance to cover the first is how agencies end up giving away most of their deposits each week.
- Use it to earn, not to cover losses. If the money won’t produce more revenue than it costs, wait or choose a cheaper product.
- Plan your exit. Many agencies use an MCA once, build up 12 months of clean bank statements, and move to a line of credit.
How to improve your approval and your rate
- Keep agency deposits in one business account. Lenders underwrite your deposits; commissions scattered across accounts or paid to you personally look like less revenue.
- Avoid NSFs and negative balance days for the 3 to 6 months before you apply.
- Know your credit and fix errors first. Moving from 640 to 680 opens bank and line-of-credit options.
- Show your renewal base. A book with strong retention is your best argument for better terms.
- Apply through one broker instead of five lenders. Multiple applications mean multiple credit pulls and UCC searches.
What you need to apply
- A one-page application
- The last 3 to 6 months of business bank statements
- Driver’s license and a voided business check
- For bank loans and larger lines: two years of business and personal tax returns and current financial statements
Get working capital for your agency
Liberty Capital Group has arranged business funding since 2004 and works with bank and non-bank lenders that understand commission-based businesses, from independent P&C agencies to life, health and Medicare brokers. We start with a soft credit inquiry, compare term loans, lines of credit and MCAs side by side, and show you the full cost before you sign. Get a quote or call (888) 511-6223.
FAQ
Can a new insurance agency get working capital?
Usually after about 6 months of steady deposits for an MCA, and 12 months for a line of credit or non-bank term loan. Brand-new agencies may need a personal loan, a captive carrier’s agent financing program, or savings to get started.
Do I need collateral?
No. These are unsecured products based on credit and revenue. Most lenders do require a personal guarantee and may file a general UCC lien.
How much can my agency qualify for?
It depends mostly on monthly deposits. A rough rule: MCAs up to about one to one and a half months of deposits, and lines and term loans based on deposits, credit and debt you already carry.
Can I use the money to buy a book of business?
Yes. A term loan is usually the best fit, because the renewals from the book you buy can cover the payments.