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Commercial Loan Insurance From an Insurance Premium Finance Loan Company
See how to get a Commercial Loan Insurance from FAME, a reputable Insurance Premium Finance Loan Company.
FAME as an Insurance Premium Finance Loan Company expands financial institutions’ ability to make business loans by providing insurance of up to 90%* of a loan to an eligible business. Insurance is provided by FAME to financial institutions that have signed a master Loan Insurance Agreement with FAME. Pro-rata and leveraged insurance are available for both term and line-of-credit loans. For term loans, lenders may choose from one-, three- and five-year fee options; for lines of credit, lenders may choose from one- and three-year fee options. Information on how FAME assesses the eligibility of a business or project can be found in Guidelines for Commercial Loan Insurance
Eligibility for Financial Loan Insurance
Any business or business project for any such business is eligible, except for businesses or uses as follows:
- Religious or fraternal organizations
- Gambling or adult entertainment facilities
- Residential housing
- Investment real estate (50% or more non-owner occupied)
- Personal, family, or household expenses
*Note: Up to 100% available for loans to veterans.
Insurance Types
1) Pro-rata: Covers a percentage of lender’s loss after a default and liquidation, up to 100%.
2) Leveraged: Covers 100% of the lender’s loss, up to 25% of the loan balance at the time of default.
Loan Amount/FAME Insurance Exposure
- Term Loans: up to 90% insurance of a lender’s loan on a pro-rata basis or up to 25% insurance on a leveraged basis (up to $3,000,000); 100% pro-rata insurance may be available for loans to veterans. FAME exposure to any one relationship may not exceed $7,500,000. (This amount is reviewed and set annually. Please verify this amount with FAME.)
- Refinance of Existing Lender Debt: up to 40% insurance of a currently uninsured lender’s loan on a pro-rata basis. Certain criteria apply. See Special Credit Considerations below, and Guidelines for Refinancing Existing Lender Debt.
- Working Capital Lines: up to 90% pro-rata insurance limited to $2,500,000 of FAME exposure, or up to 20% leveraged insurance limited to $2,500,000 of FAME exposure.
Interest Rate and Loan Term
Determined by the lender. (Term should not exceed the useful life of assets financed or serving as collateral.)
Security
All types of collateral are eligible, subject to review and acceptance by FAME. Loans predominantly secured by accounts receivable and/or inventory require a first-priority lien on said assets.
Guarantees
Any individual or entity that owns 20% or more of the borrower, or owns 5% or more of the borrower, and receives substantial income from the borrower, must guarantee the loan. All loans must be guaranteed by owners of at least 51% of the borrower in aggregate, except for nonprofit borrowers and borrowers owned by 20 or more shareholders. Exceptions to this policy must be approved by the FAME board.
Special Credit Considerations – Refinancing Existing Debt, Floor Plans, Construction Loans
Loan insurance for refinancing seller debt, floor plan lending, and construction lending have special credit considerations and limitations. Please contact a FAME commercial loan officer for additional details.
Commercial Loan Insurance Traditional Application Process
The traditional application process requires the lender to submit a completed “paper” application accompanied by information and/or documentation sufficient to underwrite the loan request. The application is then underwritten by FAME’s credit department and an insurance decision is made within two weeks, in most cases, and communicated to the lender. If insurance is approved, a Loan Insurance Authorization outlining the terms and conditions of insurance is issued.
Most loan insurance decisions are made at the staff level; however, decisions on FAME loan insurance of $1,500,000 or greater may have to be approved by the FAME Board of Directors.
Commercial Loan Insurance Application
All of the following documents must be completed and returned to FAME in order to complete the traditional loan insurance application process:
- Loan Insurance Application
- Personal Financial Statement (of all principal owners)
- Environmental Questionnaire
- Employment Plan (if the business employs more than ten (10) employees)
- Business Plan
- Department of Environmental Protection Assessment Application (if the loan amount is equal to or greater than $1,000,000)
Commercial Loan Insurance Application Downloads
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