Leveraging Life Insurance to Finance Your Business
Launching a new business or trying to secure funding to grow your operations can be very challenging. Traditional lending channels have prohibitively high requirements, and the amount needed is not always the amount your lender will approve. However, entrepreneurs can use their life insurance to finance their businesses without having to go through the red tape of traditional loans.
Life Insurance and Business Loans
When you leverage your life insurance to fund your business, you remain on the policy and continue paying premiums. The lender that offers the loan program is added as the primary beneficiary for the duration of the terms for the loan. A spouse or business partner may be named as a secondary beneficiary. If the loan’s principal is less than the payout of the life insurance policy, additional funds may be given to the secondary beneficiary. This way, the secondary beneficiary can claim the remaining funds once the loan is repaid.
What Life Insurance Policies Qualify for Business Loans?
For business loans, your life insurance is used as collateral. Business owners get quotes on their policies and then use life insurance to cover the repayment period of the business loan. As an example, if the terms on a business loan are 30 years, the life insurance policy must also be for 30 years. The life insurance policy must be obtained and presented as proof before the loan is approved. The entire process is time-sensitive, so make sure the paperwork for the loan and the corresponding insurance policy are in order. Additional medical conditions may delay the process, but closings are typically within two weeks of the initial application.
Get the Funding You Need
Because life insurance policies are flexible and affordable, using them for business loans makes getting capital more accessible than going through traditional lending channels. New and small business owners alike are using life insurance policies to get off the launching pad or to roll out growth projects. At CounselPro Lending, we offer a wide range of options to help finance your business. If you would like to learn more about leveraging your life insurance policy for a business loan, contact our offices today.