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.

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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.