
Get exclusive money-saving offers and guides
Straight to your inbox
We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!
Today more than ever, individuals and businesses have the power to choose and compare. This is especially the case with insurance products, with people forgoing the antiquated idea of loyalty to a particular insurance company in favour of comparing policies and premiums to suit their individual needs.
Insurance brokers are the go-to people when individuals and businesses alike want to compare their options and find the right mix of insurance policies for their circumstances. As such, the insurance broking industry in Australia continues to grow and thrive.
If you're an experienced insurance broker and looking to take advantage of the increased need for reputable brokers in Australia, now is the time to consider purchasing an existing insurance broking business or a revenue stream such as a book of clients. You may also want to purchase or fit out commercial premises.
There's a lot to think about before making the decision, so let's review some of the points you need to consider before buying an insurance brokering business.
When evaluating an insurance broking business or book of clients, consider the following:
As with any business transaction, it's essential that you seek independent advice before signing a contract or even before approaching a lender for an insurance broking business loan. Independent advice allows you to put the transaction at arm's length, to separate emotion from objective facts, and to consider the feasibility of the purchase from a legal and financial standpoint.
Consider seeking advice from the following professionals:
Wondering how to finance all these initiatives? Find out how to increase your chances of getting approved for an insurance broking business loan.
The amount you can borrow will depend on your financial circumstances, your borrowing power and whether you have appropriate residential property to offer as security for the loan.
As a guide, suitable applicants approved for a secured business loan can borrow up to 60% of the value of a book of clients, and up to 70%of the value of freehold commercial property.
The key to getting your insurance broking business loan application approved is to understand what banks and other lenders are looking for in a customer, and the factors that lenders consider when evaluating a loan application.
If you look at the loan application process from the lender's point of view, you'll increase your chances of getting approved for finance because you'll be prepped to provide the lender with the information they need to know. Lenders look for:
The insurance broking industry is unique, and lenders have devised certain performance benchmarks that they use to assess the feasibility of an insurance broking business or book of clients. These benchmarks will vary from lender to lender, but as a guide, assess whether the business or book of clients you intend to purchase satisfies the following:
If the broking business or book of clients does not satisfy the above benchmarks, it doesn't mean that your finance application will be automatically declined or that the purchase is necessarily a bad one. It may mean, however, that the lender will require additional security over the loan, or that you could consider offering a lower purchase price to the seller.
At times it can be difficult for insurance brokers to obtain funding to purchase a business or book of clients or to fit out or purchase commercial property. This is because some of the major lenders have historically turned away from insurance brokers due to a lack of understanding of the industry. As a borrower, you have a number of options when it comes to obtaining finance for your insurance broking business, and it may be that an independent lender such as those detailed on this page could be more willing to offer finance and make the process easier than one of the big banks.
Banks can be a viable option for applicants with a strong financial history, a detailed, feasible business plan, and sufficient security such as residential property to secure the loan. A bank may offer a secured business loan to a suitable applicant.
Alternative lenders are more likely to consider the individual circumstances of the applicant and to assess the future potential of the business. Alternative lenders could offer a secured business loan to a suitable applicant, or an unsecured business loan to an applicant who may not have residential property to offer as security for the loan. Unsecured business loans tend to attract higher interest rates and less favourable loan terms, however they give borrowers the opportunity to access funding that may have otherwise been unavailable.
When comparing business loans, the first step is to assess the eligibility criteria of the individual lender and the loan product. This assessment will help you to eliminate business loans that don't apply to your individual circumstances.
Next, consider the ongoing repayment terms of the loan products, and how they fit in with your business's needs. After preparing your business plan and financial documents, you will have a good idea of the loan repayments that you can comfortably service. Eliminate business loans that offer inflexible repayment terms, or a loan term too short to be comfortably serviceable.
With more and more alternative lenders entering the finance arena, as a borrower you have the power to compare and choose financial products to suit your circumstances.
Robinhood is set to go public as soon as June. Here's what you need to do to buy in from Australia.
How to compare gold storage options and find a secure solution that works for you.
Off the back of Christmas spending, a finance expert has warned that your Afterpay habits could negatively impact your home loan application.
A UCapital unsecured business loan can provide up to $300,000 without security, with repayment terms between 3 and 12 months.
Learn the key considerations when it comes to starting and growing your smartphone app company.
Find out how to turn your passion for homewares into a profitable business.
Are you ready to take the plunge and open your own arborist business? Find out how to do it here.
Find out the steps to opening a garden edging business.
Do you have to tell your lender if you rent out a room and turn your mortgage into an investment loan?