Insurance is Required to get Business Finance

Any proposed loan may need to be secured by life assurance for all borrowers, covering both the amount and the term of the advance. Today, there are various repayment methods available, including the traditional 'capital and interest' option (commonly known as a 'repayment mortgage') as well as interest-only options supported by alternative means of capital repayment at the end of the borrowing term. Each method has its advantages and disadvantages, so it is crucial to seek impartial and independent financial advice to ensure you choose the most suitable option. We can facilitate introductions to trusted advisors in this regard.

The property you purchase must also be insured against loss or damage, such as fire. This includes both the structure itself and its contents, such as stock, fixtures, and fittings. These can often be covered under a tailored package policy specific to the trade (e.g., a shopkeeper's or hotelier's policy).

Other types of insurance are either essential or highly recommended. These include motor insurance (a legal necessity), personal contents insurance (covering possessions such as furniture and clothing), and pension contracts (offering significant tax advantages and ensuring a steady income during retirement). There is also a growing demand among borrowers and lenders for critical illness cover and personal health insurance (PHI).

We would be happy to arrange introductions and quotations for any of these insurances through our network of trusted contacts.

At this stage, you may not know the exact levels of cover required—such as for stock. However, we recommend providing your best estimates so that we can obtain comparative quotations. These estimates can be refined just before or shortly after taking over the business. Additionally, you have the flexibility to adjust your 'sums insured' at any point during the trading year.

While we act solely as introducers for life assurance and pension planning, there are important considerations to address. Please inform us from the outset if there are any medical conditions that might impact the level of risk or choice of life assurance provider. Additionally, let us know whether you are a smoker, as this can significantly influence premium costs.

Effective pension planning is essential to maintaining your standard of living in retirement. For the self-employed, we can connect you with expert advisors to ensure you receive tailored guidance. Although it may be wise to first gain experience in your new business to determine your ability to make consistent contributions, it’s important to avoid unnecessary delays, as starting a pension scheme sooner can be far more cost-effective. If applicable, previous pension rights can also be transferred into a new scheme to enhance benefits.

Learn more, contact Nationwide Business Finance to find out the best options available for your needs.

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