Insurance Premium Funding Is A Winner For SMEs

Australian consumers are regularly offered the option to manage their payments on a monthly basis – for utility bills, vehicle registration, instalment plans on major purchases, health insurance and even their life insurance premiums. This takes some of the pain out of personal budgeting.

It’s a different story for small to medium businesses (SMEs). Even though their revenue may be cyclical or seasonal, they’re still expected to plan for major costs which only occur annually. Yearly invoices for items like fleet registration renewals, accounting and audit fees and the big ones – annual insurance premiums for property, vehicles, workers’ compensation, public liability, professional indemnity, business interruption and possibly credit insurance – may land in a small business owner’s in-tray all at once.

However, there is a solution, in the shape of insurance premium funding, also known as premium financing. The majority of SMEs arrange their cover through their insurance broker. The challenge then is how to pay for the appropriate insurance cover for their business, without impacting cash flow.  A premium funding loan allows a business to repay the insurance premium in manageable instalments over an agreed period of time, providing many tangible benefits.

Spread the cost

Instead of being hit with a large bill all at once, you can even up the cost throughout the year, making budgeting and cash flow forecasting much easier.

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 payments.

Predictable monthly instalments

Once you have organised your premium funding loan, you know exactly how much cash you need to come up with each month in order to cover all your insurance needs. If your revenue is seasonal, you may be able to change the frequency of repayments to weekly, fortnightly or quarterly, rather than paying equal monthly instalments.

Lock in the interest rate

It’s reassuring to know that your loan will have a fixed interest rate. You can get on with running your business in the knowledge that there will be no unpleasant surprises.

Tax-deductible interest cost

Although taking out a loan to finance your insurance premiums does mean you pay interest. The interest and fees you pay may be tax-deductible business costs*.

Free up cash flow

This is the major benefit. Funding your insurance premiums puts you back in control of your business cash flow. You’ll be able to continue purchasing inventory and materials, as well as paying your employees and suppliers without interruption.   You might even be able to reinvest the cash in assets to grow your business.


At BOQ Finance we have a team of Insurance Premium Funding experts that can help you find the best solution for your business.

Contact us today on 1300 078 285 or email to find out more.


All products are offered solely by BOQ Cashflow Finance Pty Limited ABN 68 062 762 921. BOQ Cashflow Finance Pty Limited is a wholly owned subsidiary of Bank of Queensland Limited ABN 32 009 656740. Bank of Queensland Limited does not guarantee or otherwise support the obligations or performance of BOQ Cashflow Finance Pty Limited or the products it offers. This blog post is for general information purposes only and is not intended as financial or professional advice. It has not been prepared with reference to the financial circumstances of any particular person or business and should not be relied on as such. *You should seek your own independent financial, legal and taxation advice before making any decision about any action in relation to the material in this article.