Insurance Premium Funding – A Solution for SMEs

If you’re self-employed, you know the hassle and stress of paying your annual premiums for your business in one hit. Insurance premiums paid in an annual lump sum can put a serious strain on cash flow for small and medium business (SME). The majority of SMEs arrange their cover through their broker. The challenge then is how to pay for the appropriate insurance cover, without impacting their business’ cash flow.

There is a solution to help, in the shape of insurance premium funding, also known as premium financing.

How does Insurance Premium Funding (IPF) work?

Pacific Finance Australia has access to a wide panel of lenders that you can choose from. The lender pays the premiums on your behalf, allowing you to pay the lender back in smaller instalments. By securing finance to pay off these upfront costs, you can spread the cost of your premium over the year.

With insurance premium funding, cash flow that would normally be tied up in insurance premiums, is released and can be invested back into your business. It offers a way to reduce the financial burden, by spreading the cost of insurance premiums, over the course of the year. IPF can provide a number of benefits to your business.

Benefits of Insurance Premium Funding:

  • Distributing the upfront cost
    Instead of being hit with a large bill all at once, you can balance the cost throughout the year, making budgeting and cash flow forecasting much easier.
  • Make easy monthly instalments
    Once you have organised your IPF loan, you will know exactly how much you need to budget for each month, in order to cover all your insurance needs. This allows you to pay your annual insurance premiums in monthly instalments that better suit your business cash flow needs.
  • Fix your interest rate
    It’s reassuring to know that your loan will have a fixed interest rate. There will be no unpleasant surprises with your monthly cash flow, giving you the freedom to get on with the day to day of running your business.
  • Simplify your accounting
    You will be able to aggregate a number of separate insurance policies into a single loan. This will make your accounting less complicated, since you only need to make one monthly payment instead of several single payments.
  • Understand which loan interest expense are tax-deductible
    While IPF does mean you will incur interest at an agreed interest rate, you may be able to write off the interest and fees you pay as a business expense at tax time. Your accountant or tax adviser will be able to confirm whether this is the case in your particular situation.
  • Release your working capital and stay protected
    In these uncertain times there’s more need than ever for a steady source of working capital to pay employees, purchase inventory and cover overhead expenses. Funding your insurance premiums puts you back in control of your business cash flow. You might even be able to reinvest the cash in assets to grow your business.


What you can expect with a Pacific Finance Broker

  • Access to one of Australia’s largest panel of lenders, including all the major banks as well boutique financiers.
  • The markets’ most competitive interest rates combined with multiple repayment options to suit your cashflow needs.
  • Cost-effective and flexible loan options that are specifically tailored for you.
  • No additional security requirements for the loan.
  • Finance Specialists that are experienced in helping businesses grow through both short-term and long-term business finance solutions.

Let us help you take your business to where it needs to be with an obligation free facility review of your business.

Contact your respective Pacific Finance Broker today for more information.