To Clients or potential Clients
Premium finance can be used to fund the cover for any class of general insurance. The loan is repaid, in equal instalments to suit the organisation. The insurance policy is used as the collateral to secure the loan, leaving other assets on the balance sheet untouched. As there is no charge on the company assets, and the loan will normally be paid within the financial year, premium finance borrowings may not need to be included on the balance sheet subject to advice from the client's accountants. Premium finance funding is provided for almost all premium values in a variety of currencies and with very competitive rates, which often show a saving when compared to traditional forms of borrowing.
Clients deal with one confidential contact providing them with both insurance and finance. Documentation is simple, with a rolling annual contract and Direct Debit Mandate, requiring only a revised internal schedule of risks at renewal.
The Benefits of Premium Finance
Budgeting of Cash Flow
The key benefit of premium finance is that the monthly premium instalment can be part of the budgeting process. Rather than having to allow for large payments of premium at certain times during the year, the monthly payment to Cananwill can be scheduled along with rent, utilities, payroll, etc.
Lower Cost of Capital
Most businesses operate on a mixture of capital and borrowing, but few are able to borrow as cheaply as Cananwill. Because Cananwill borrows large amounts of money over a short term, they are able to pass the resulting savings on to the borrower in the form of very competitive rates. Short-term borrowing also allows a quick response to changes in the interest rate environment, or financial needs.
Increased Leverage of Available Assets
Business loans typically require an asset to be mortgaged as collateral, and many companies are limited in their borrowing by the amount of unpledged assets. Premium finance allows the use of the asset of the insurance policy to secure the loan. This leaves other balances on the balance sheet untouched and free for alternative uses.
Alternate Source of Capital
By using premium finance other sources of capital such as lines of creditor notes can be preserved. Existing cash assets do not have to be liquidated to pay insurance premiums.
After Tax Benefits of Premium Financing
An often over-looked advantage of premium financing is that of the after tax benefit. The tax savings that accrue by using premium finance can be calculated using the internal rate of return and tax rates. And this after tax benefit off-sets the cost of financing. A cash flow analysis is available to provide an indication of potential savings.
Total Security
Cananwill Premium Finance offers a completely confidential and secure service, providing insurance and finance from a single contract with a major global broker.