The Ins & Outs of Insurance Premium Funding

When it comes to protecting you and your assets, insurance is a no brainer and in most cases from a lender’s perspective, non-negotiable. Learn how Insurance Premium Funding (IPF) can benefit you and your business. 

Asset insurance is a risk management strategy. It reduces the financial impact or loss to your business if your assets are damaged, written off, or stolen. Depending on which cover you have in place, you can be protected against costs relating to repair or replacement of equipment as well as lost income from downtime as a result of the equipment loss or failure.

Protecting your assets with insurance typically comes at a high price. This can dent your cash flow. IPF is a flexible solution which protects your cash flow. IPF allows you to pay your premiums on a monthly basis even if your insurance company does not offer monthly repayments.

How it Works

In the lead up to your insurance premium due date, your insurance provider or broker will send you policy renewal invoice/s. Once you have provided these to your broker at Magnolia Lane, they will send you quotes for 6-12 month loan terms, depending on your needs. After you have accepted one of the quotes, we will provide a contract from the lender for you to sign.

At settlement, the IPF lender will pay the premium/s on your behalf. You will then commence paying monthly instalments back to them for the stipulated loan term.

The process from application to settlement is fast and efficient. Even better, we manage it on your behalf every step of the way.

Benefits of IPF

There are a number of benefits of IPF. The most obvious is the preservation of cash flow. Insurance premiums can be quite expensive, particularly if you have a number of policies to cover your fleet. With IPF, rather than paying a lump sum and eating into your cash flow, you can break your premiums down into much smaller, more manageable monthly repayments. This frees up cash that you can invest back into your business.

If you do have several policies, it may be confusing to keep track of which ones you have and have not paid. IPF allows you to manage and pay multiple policies in one monthly instalment saving you time and confusion. With fixed interest rates and terms, you can be confident knowing what your repayments are and when they will be due.

Both the premium and interest payable may be allowable business expense deductions come tax time, making IPF a tax effective option.

If you have existing equipment finance loans with Magnolia Lane and choose us for your IPF, you have the added benefit of housing all your finance under the one roof. This means that when you need a policy added or cancelled off your IPF loan, you need a payout on your equipment finance loan, or you have misplaced your loan documents, you just have to think of one name, Magnolia Lane. We are your dedicated point of contact. We exist to alleviate confusion and reduce the frustration of post-settlement contract administration.

Need to Cancel or Add a Policy? 

If you have let go of an asset for one reason or another and no longer require cover for it, your insurance company will process any applicable refund to the lender. The lender will then pass this onto you, pending any outstanding payments. If you have multiple policies on the same IPF contract, the lender will recalculate your repayments, taking out the policy which has been cancelled.

Likewise, if you acquire new assets throughout the loan term you could be eligible to add these to the loan. Bear in mind that repayments would be adjusted accordingly.

Applying for IPF

For an obligation free IPF quote, contact the broker team via broker@magnolialane.net.au or our office on (02) 8287 3000.

Have you followed us on social media? Connect with us on Instagram, Facebook, and LinkedIn.

The post Insurance Premium Funding appeared first on Magnolia Lane Financial Services.

From Startup to Success

In 2018, James and Shannon Pickup had one truck and a dream. Three years and five vehicles later, Australian Pipeline Management, have gone from startup to success. 

A qualified plumber by trade, James Pickup has been in the industry for most of his life. After completing his apprenticeship and gaining experience working in his family’s business, James and his wife Shannon ventured out on their own to establish Australian Pipeline Management (APM) in 2018 and went from startup to success in just three short years.

As the name suggests, APM supports the full pipeline network, providing services ranging from CCTV pipe inspections and locating, to pipe and underground sewage surveying. Beyond this, APM offer support through the construction process, surveying and reporting on pipe and drainage pre and post construction.

When James and Shannon first approached Magnolia Lane, they were looking down the line at a $100k+ equipment finance loan with less than a month’s trading history under their belts. That meant they had no financials and no existing business credit to evidence their ability to service the loan. How does that work, you may ask? Well, there are no clear-cut rules about what will and won’t get a lender on side but there are certainly a few things that help.

Getting Lenders on Your Side

• Confirmable personal credit – Lenders look at existing credit, such as car loans, for reassurance that you can and will make your repayments on time.
• Asset backing – Be it home ownership or exceptional savings, lenders like to see that you have existing assets behind you.
• Deposit – Business infancy poses an obvious risk to lenders. One way to negate this perceived risk is to offer a deposit, typically between 10 – 20% of the asset price.
• Business continuity – If you have been operating as a sole trader for over two years and transition your business into a company, your sole trader history, including financials, can be used to support and endorse your application.

APM’s Success

Since their first purchase in 2018, APM have settled on 13 pieces of equipment ranging from motor vehicles and trucks right through to niche equipment specific to their industry. Their most recent acquisition was a Volvo FE320 6×4 Rigid Truck, kitted out with a Combi Whale 3 Vacuum System. This is a massive step forward for the company, allowing them to win additional jobs which, without it, they would not have been able to take on. To have settled on so many pieces of equipment, their most recent being the biggest yet, is no mean feat given they began operating a mere three years ago. It is certainly a testament to how well James and Shannon have been running their business.

While APM primarily operates out of Sydney, they also service major regional areas including Wagga Wagga, Dubbo, Bathurst, and Newcastle. You can reach them on (02) 9066 9150 or check out their (soon to launch) website at http://www.auspipemanagement.com.au/. To hear more from APM, check out the interview we did with James, here.

When it comes to equipment finance, Magnolia Lane doesn’t take a ‘once size fits all’ approach. We know that’s not how things work. But instead of putting you in the too hard basket and turning you away, we will do everything we can to tailor a solution for you. Our role as a broker is to do the hard work and get the lenders to fight for your business. So, whether you’ve been in the game for five months or 50 years, give us a call on (02) 8287 3000 or get a quote and see what we can do for you and your business!

We’ve got your back because we want you back.

The post One Truck and a Dream: From Startup to Success appeared first on Magnolia Lane Financial Services.

Unpacking the Federal Budget 2020

On 6th October 2020 the Government announced the Federal Budget. The focus of the budget is paving a road to recovery from the global COVID-19 pandemic and the resulting recession.

Federal Treasurer Josh Frydenberg MP delivered the 2020-21 Federal Budget earlier this month. Unsurprisingly, it primarily looks to deal with the fallout from the COVID-19 pandemic and resulting recession. The COVID-19 pandemic has caused a global crisis that is considered the worst global economic crisis since the Great Depression.

With the announcement of their Economic Recovery Plan, the Government have said they are paving a road to recovery. The road is centred around rebuilding the economy and creating jobs. The intention is to ensure that Australia emerges from the recession in a strong position.

There are many initiatives being introduced. In this article we aim to detail the key points that we feel are of most benefit to our customers. You can view a full rundown of the budget here.

Lower Taxes for Individuals

Positively, it is estimated that of the 1.3 million people who lost their jobs or were stood down due to the pandemic almost 60% are now back at work. It is estimated that over 11 million Australians will benefit from the breaks being introduced to taxpayers.

An additional $17.8 billion in personal income tax relief is being delivered which includes an additional $12.5 billion over the next 12 months. This builds on the $8.1 billion in tax relief already delivered for the 2020-2021 year under the already legislated Personal Income Tax Plan.

From 1st July 2020:

• The low-income tax offset will increase from $445 to $700
• The top threshold of the 19% tax bracket will increase from $37,000 to $45,000
• The top threshold of the 32.5% tax bracket will increase from $90,000 to $120,000
• A one-off additional benefit payment up to $1,080 from the low-middle-income tax offset

Business and Investment

A temporary tax incentive will be made available to approximately 3.5 million businesses which equates to over 99% of Australian businesses. Businesses will be able to write off the full value of assets purchased from 6 October 2020 (7:30pm AEDT) and first used or installed by 30 June 2022. The full cost of eligible depreciable assets of any value will be deducted in the year that they are installed.

Full expensing will significantly reduce the after-tax cost of eligible assets, providing a cashflow benefit and creating a strong incentive for businesses to bring forward investment before it expires.

This incentive builds on the enhanced instant asset write off and the accelerated depreciation that was announced through the Backing Business Scheme. You can read our previous article on the instant asset write off here.

Businesses with turnover up to $5 billion will be able to offset losses against previous profits on which tax has been paid to generate a refund. Losses incurred up to 2021-22 can be carried back against profits made in or after 2018-19.

The aggregated annual turnover threshold has been lifted providing an additional $105 million in tax relief to expand access to a range of small business tax concessions. Businesses with annual turnover of $10 million to $50 million will now be able to access up to 10 small business tax concessions.

Infrastructure

An additional $14 billion in new and accelerated infrastructure projects over the next 4 years has been committed. This forms part of the Government’s record 10-year transport infrastructure investment pipeline. Prior to this, the pipeline had been expanded to $110 billion supporting 100,000 jobs on worksites. The additional $14 billion is estimated to support a further 40,000 jobs in construction.

The investment pipeline includes projects in every state and territory. More detail on the investment pipeline can be read here.

An additional $3 billion towards ‘shovel-ready’ projects to support further job creation and economic recovery has been announced. This is in addition to the $2 billion already announced since May 2020. Included in these projects are the delivery of small-scale road safety projects as well as additional funding for the Local Roads and Community Infrastructure Program. These programs are estimated to support over 10,000 jobs over the next two years.

Housing

The First Home Loan Deposit Scheme has been extended to an additional 10,000 first home buyers in in 2020-21 allowing them to fast track the purchase of a new home. The scheme allows first home buyers to secure a loan with a deposit of as little as 5% with the Government guaranteeing up to 15% of the loan.

An additional $1 billion will be invested in the Government guarantee of the National House Finance & Investment Corporation allowing this body to increase its bond insurance into the wholesale capital market with the view to attracting more institutional investment into affordable housing for Australians.

These initiatives are in addition to the HomeBuilder program that the Government announced on 4 June which provides eligible owner-occupiers with a grant of $25,000 to build a new home or rebuild an existing home.

Employment and Job Creation

The Government has launched a $4 billion initiative titled “JobMaker”. The aim of the initiative is to provide hiring credit to employers who hire eligible young employees (aged 16-35). For each eligible employee, $200 per week will be paid quarterly for those aged 16-29 and $100 per week for those aged 30-35. The Government estimates that this initiative should support around 450,000 jobs for young people.

Another initiative titled “JobTrainer” aims to upskill and reskill employees by creating up to 340,000 free or low-cost training places for school leavers and job seekers. An additional $2.8 billion has been committed to protect apprenticeships and trainees. Even further, an additional $1.2 billion has been committed to create 100,000 new apprenticeships and traineeships and a 50% wage subsidy for employers who hire.

At Magnolia Lane, we tailor finance solutions specific to your unique business needs. It is our role as your equipment finance broker to source the best possible rate for you. Through our accreditation with a suite of lenders, there really is no limit to what we can assist with. Contact us or get a free quote today and let’s grow together.

Have you followed us on social media? Connect with us on Instagram, Facebook, and LinkedIn.

The post Federal Budget Unpacked appeared first on Magnolia Lane Financial Services.

Extension of the Instant Asset Write Off

The Instant Asset Write Off is a Government tax deduction aimed to boost the economy by promoting business spending. To view the full incentive please visit the Australian Tax Office website.

Extension Granted Until 31st December 2020

The good news is that the Government has extended the Instant Asset Write Off deduction to further stimulate the economy until 31st December 2020. So, if you do need to upgrade or purchase new business equipment we would love to help you take advantage of this tax saving.

Let’s look at a quick recap of the Instant Asset Write Off tax deduction:

• Eligible assets up to $150,000
• No limit to the number of assets written off
• Business with aggregated annual turnover of less than $500 million are eligible
• Settlement must occur before 31st December 2020

We pride ourselves on being able to source the best funding option for your business, quickly and seamlessly.

We would love to chat with you if you need any assistance with your finance arrangements or if you just are looking for someone to speak to about your business plans in general. Magnolia Lane is accredited with the full suite of lenders to assist you and arrange a fully tailored finance solution. You can view our full list of products and suite of lenders, here.

At Magnolia Lane, we tailor finance solutions specific to your unique business needs. It is our role as your equipment finance broker to source the best possible rate for you. Through our accreditation with a suite of lenders, there really is no limit to what we can assist with. Contact us or get a free quote today and let’s grow together.

Have you followed us on social media? Connect with us on Instagram, Facebook, and LinkedIn.

The post Instant Asset Write Off Extension appeared first on Magnolia Lane Financial Services.