If the Federal Deposit Insurance Corporation (FDIC) signals narrow changes for depositors, it could lead businesses to explore alternative options for securing their finances and obtaining lending from different sources. One such option is turning to insurance products and another is smaller banks or alternative lenders. Here are some reasons why businesses might consider insurance products or a business loan from YesMrBanker for increased security and lending:
- Annuities: Annuities are insurance products that can provide a steady income stream for businesses. Deferred annuities allow businesses to invest a lump sum or make periodic contributions, which grow tax-deferred until the business starts receiving income payments. This can help businesses create a stable revenue source, which may be useful when applying for loans.
- Cash value life insurance: Permanent life insurance policies, such as whole life or universal life, have a cash value component that grows over time on a tax-deferred basis. Businesses can borrow against the cash value of the policy, providing an alternative lending option. Additionally, the cash value can serve as collateral when applying for loans from traditional lenders.
- Key person insurance: Key person insurance provides financial protection for businesses in case a critical employee, such as an owner or executive, passes away or becomes disabled. The insurance payout can help cover the loss of revenue, recruitment, and training expenses associated with the loss of a key person, ensuring business continuity and maintaining creditworthiness.
- Business interruption insurance: This type of insurance covers lost income and additional expenses incurred due to an unexpected event, such as a natural disaster, that disrupts business operations. Having business interruption insurance can enhance a company’s financial stability and make it more appealing to lenders.
- Credit insurance: Credit insurance protects businesses from non-payment of commercial debts. This can be particularly useful for businesses that rely on accounts receivable or have concerns about their clients’ creditworthiness. By mitigating the risk of non-payment, credit insurance can improve cash flow and enhance a business’s ability to obtain lending.
- Small Business loans: these loans from online lenders, like YesMrBanker, focus on your revenue vs creditworthiness. It does play a role but lenders in the alternative lending space are looking to help small business owners when they’re in a pinch to get over a piece of broken equipment or a client paying an invoice late.
While insurance products can provide additional security and lending options for businesses, it’s essential to carefully evaluate the costs, benefits, and potential risks associated with each product. By Consulting with a YesMrBanker financial advisor on business loans or insurance professional to determine which insurance products, you will find that having someone in your corner who understands the industries will be of great help to you when making financial decisions.