Paying insurance in instalments can help businesses facing cash-flow challenges.
Premium funding works by having a funding company pay the full premium of your policy on your behalf to the insurer while you repay the funder in monthly repayments.
This can help with your cash flow and can potentially help you to afford to take out multiple policies, if required. There is an interest rate to pay – usually a fixed rate – which is generally tax deductible for the business.
Horticulture Portfolio Manager, Rashmi Soni, said there are many organisations that offer insurance premium funding.
“It’s just a loan transaction, really,” she said. “Instead of paying the premium upfront, the funder pays the premium to the insurer, and the business pays the premium funder over either 10 or 11 months.”
Options
This type of funding can give businesses more options. For example, a small business can use it to pay for a number of insurances, not just one. The funder may also combine multiple policies into a single loan, which can enable the business to make repayments each month via a single payment.
Soni adds that it’s often a better option than approaching a bank as no collateral is required. Banks often want security before funding a loan, such as a charge over the business owner’s home.
“Premium funding can be available for various amount from a few thousand dollars to many thousands,” Soni explained. “Meanwhile, in the current environment of rising interest rates, businesses need to check the rates they’ll be charged on any premium funding arrangement before taking out a loan.”
If you’re interested in further discussion, get in touch with Fitzpatrick & Co on 03 8544 1600.
Important note
Fitzpatrick & Co has specialised in the horticulture and arboriculture industry for over 30 years, providing assistance and financial support to companies, associations and events. Fitzpatrick and Co is there when the industry is in need.
This article provides information rather than financial product or other advice. The content of this article, including any information contained in it, has been prepared without taking into account your objectives, financial situation or needs. For more information or questions on Premium Funding or your own policy, please contact Fitzpatrick & Co. Insurance Brokers on 03 8544 1600 or email: insure@fitzpatrick.com.au OR visit our website at fitzpatrick.com.au.