Cliffbank Lenders, a small-business funding service in Merced, California, explains funding for Merced County accounting and tax practices, bookkeepers, insurance agencies and engineering or consulting offices: payroll ahead of billing, lines of credit, office build-outs, and acquiring a practice or book of business. It uses Census counts of local firms. Funding partners decide.
| Accounting and bookkeeping firms, county (2023) | 53 |
|---|---|
| Insurance agencies, county (2023) | 57 |
| Accounting firms under 5 employees | 62.3% |
| Insurance agencies in ZIP 95340 (2023) | 25 |
| Uses to compare | Payroll, acquisitions, build-outs |
| Who decides | The funding partner |
Few hard assets, steady clients
An accounting practice or insurance agency may own little equipment. Much of its value is in recurring clients: tax returns filed every year, bookkeeping retainers, insurance policies that renew and pay commissions. A firm like that has little to pledge as collateral. Partners reviewing a professional firm may lean on cash flow, client retention and the owner's credit rather than on assets.
Cash timing varies by firm. Tax practices can see fees cluster around filing deadlines while employee costs run all year; bookkeepers bill monthly; insurance agencies receive commissions on carriers' schedules; engineering and consulting offices bill by milestone.
Accounting firm loans for payroll and uneven months
Accounting business loans can cover payroll in the months between filing deadlines, when the firm keeps its preparers but billing is lighter. A line of credit drawn in the lighter months and repaid when fees come in can match that pattern, where a fixed loan repays on a different shape. CPA firm financing for a single need, such as new practice software or a hire, may suit a short working capital loan.
Insurance agency loans for buying another agent's book
Insurance agency acquisition loans fund the purchase of another agent's book of business. Partners review the book's commission history by carrier and line, its retention rate, the purchase agreement and the buyer's own agency records. Insurance agency financing for an acquisition can be a term loan, with the price sometimes tied to a multiple of commissions, which partners will want explained.
The same logic applies to buying an accounting practice: the client list and its retention after the sale are what the partner is really lending against.
Engineering, architecture and consulting offices
Engineering and design offices bill by milestone on projects that can run for months, and they carry licensed engineers and designers throughout. A line sized to the gap between milestones is one option. Merced County, CA had 13 architectural and engineering offices with employees in 2023 and 62 without employees in 2024 (separate Census programs).
Office build-outs and technology
Moving to a larger office or rebuilding a suite is a term loan purpose. Computers, servers and phone systems date quickly and can be financed on short terms or leased. A copier fleet or a document scanner can be financed through equipment financing too.
Professional firms in Merced County, CA, counted by the Census
County Business Patterns counted 53 accounting, tax preparation, bookkeeping and payroll firms with employees in Merced County, CA in 2023; 33 (62.3%) had fewer than five employees and 17 were in ZIP 95340. Insurance agencies and brokerages numbered 57, with 41 (71.9%) under five employees and 25 in ZIP 95340. Legal services offices numbered 43.
Nonemployer Statistics counted 188 accounting and bookkeeping businesses and 139 insurance agencies without employees in 2024, separate counts from a separate program. The county-wide picture sits on the Merced, CA figures page; other sectors are on the industries page.
What partners usually read for a professional firm
- Business bank statements and monthly billings
- Client retention or policy renewal reports
- For an acquisition: the purchase agreement and the seller's revenue or commission history
- Business and personal tax returns for larger requests
- Professional license records
Illustration only: an insurance agent buying a retiring agent's book for $186,000 shows a commission history of about $64,000 a year on the book. A partner will weigh the payment against that commission stream after allowing for some clients leaving after the sale.
Questions to ask before buying a book of business
- What share of clients or policies renewed last year?
- Is part of the price paid later, based on retention?
- Will the seller introduce the buyer to the largest clients?
- Do any carrier appointments or engagement letters need to be reissued?
A price paid partly on retention shares the retention risk between buyer and seller, which a partner can take into account.
By Cliffbank Lenders · Updated
