For millions of entrepreneurs, the dream of opening a new business or expanding an existing one would never come true without relying on a business loan. And according to the most recent study by the Small Business Administration Office of Advocacy, Small Business Lending in the United States, 2017, the total number of small business loans grew from 22.97 million in June 2013 to 24.22 million in June 2015, so business borrowing continues to increase.

But while most business owners instinctively insure their new or expanded operation with general liability, workers comp, and other essential coverage, many may not realize the value of disability insurance for business loans.

Why is business loan DI so critical?
Business loan disability insurance (also known as bank loan DI) is crucial for professionals who are opening their first practice or expanding. If a business owner becomes disabled, he or she could easily end up struggling to make their loan payments. Business loan DI coverage would kick in and make those payments, keeping the business alive until the owner can return to work.

Many banks require it.
In many cases, a business owner looking to get a loan won’t have a choice – the bank will require disability insurance as a condition of making the loan.

Educate your clients and prospects about the difference between individual DI and business loan DI. Personal disability insurance will replace some, but not all of an owner’s income and is intended to cover personal expenses such as a mortgage, food, and medical bills. And the last thing a disabled business owner needs is the stress of choosing between paying the mortgage and meeting their ongoing loan obligations. The smart choice is to have two policies to cover both exposures.

Six keys to succeeding in the business loan DI market:
The business loan DI market is still relatively untapped, but that doesn’t mean it’s an easy sell. If you want to excel, here are some key strategies:

  1. Form partnerships with lenders that specialize in financing for your industry. Refer people who need loans to those lenders, and encourage referrals for borrowers who need insurance.
  2. Network with others in the industry by attending industry events and supporting their associations. Be genuinely interested.
  3. Reach out to centers of influence such as attorneys and CPAs who work with professionals in your field. Always be learning about your target market.
  4. Keep communication open with new and existing referrals by sending out a monthly e-zine, writing helpful articles, and sending personal notes. Stay top of mind.
  5. Get face time whenever possible. Emails and letters don’t always do a very good job of conveying the need for business loan DI, and personal conversations are usually more effective.
  6. Immediately follow up on leads with a call to answer any questions and provide more information. The early bird gets the worm, so to speak.

Use business loan disability insurance as a stepping stone for other discussions.
Selling business loan DI can also get your foot in the door to talk about other coverage such as key person insurance or multi-life DI, helping you be seen as a complete solution for your clients.

A business loan is one of the biggest expenses many of your clients and prospects have. Help them avoid financial disaster by making sure they’re covered if disability should strike. With affordable premiums and a relatively untapped market, business loan DI makes a lot of sense – for you and your clients.

Want to know more? Read our business loan disability insurance case study. And for information about other business owner products, download our client handout, What’s Covered By Business Overhead Expense Policies?

Click here for more information about DI for business owners.

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