Today I discussed with our financial planner George, an interesting story about how we can advocate for our clients insurance needs. 
 
We had a client, let’s change his name to 'Mark', looking to get insured through Wilson Financial. He was healthy, had a strong income and he was tripling his debt by buying a new home and renting their current home. He was building his wealth and knew that he needed cover to protect it. 
 
During our fact finding process we found that a decade earlier Mark had been diagnosed with a serious condition which would prevent him from being insured. Various lifestyle changes meant that he had since stopped experiencing symptoms however, "I haven’t had any issues whatsoever since I moved to a different climate, that was over a decade ago".
 
The issue for the insurer was that he had been to a doctor just a few months prior with a symptom that could possibly be related to his previous condition. The underwriter assessing his insurance connected the dots and decided they wouldn’t insure Mark. This put the client in a difficult position "I never imagined being in this much debt, I was counting on the insurance".
 
Rather than accept the decision and inform the client, George took things a step further. He personally contacted the underwriter who had made the decision on the case and discussed the facts surrounding it. As it turns out, the incident three months ago resulted in a series of medical tests and X-rays that could potentially prove that the doctor’s visit was unrelated. George then asked the client to go back to the hospital and request these records.  With this new information, they were able to confirm that the symptom was not related to a major condition, and they reversed their decision.
 
George tells us that "Sometimes, due to major medical issues it is impossible to get insurance for our clients, however; we do everything in our power not to accept a decline on an application. I wouldn’t want to deal with the stress and anxiety of not being covered, and we don’t want our clients to go through that either."
 
We think outside of the box to get results, we work with our contacts within the industry to better our clients position, and we will not give up on what we believe should be approved.

*Names and minor details have been changed to protect identity

A tradesman came to see us last month, disgruntled with his current bank, and keen to take the dive into becoming self-employed. Let’s call him Paul.

Paul was very adept in his trade, having worked in it for over a decade. He had diligently paid down his home loan and had a good piece of equity in there. Unfamiliar with business loans or how banks worked, he had gone to his lender to ask for advice. He’d been referred to a small business banker who hadn’t called him back. A friend had told him to speak to me about financing some equipment.

Paul had a great credit character. This was illustrated by his good job stability, repayment history, equity position, and clear credit file. I asked Paul what he wanted to do. “I need to buy about $70k worth of equipment before I can go on my own. I’ve found the goods, but I don’t know how to get the finance”. Paul thought he needed a small business loan, however, he was buying equipment. Equipment is great collateral because it can be repossessed! As negative as that may sound, this is how the banks think. If they have ‘security’ or ‘collateral’ you’re going to get a better rate, and a higher chance of approval. I would add to this that the process is a lot simpler and straightforward then a small business loan that is unsecured.  I discussed the equipment loan structure with Paul, and we worked through some cash flow forecasts based on his industry knowledge.

With a start-up, we must illustrate the affordability equipment through he business’s performance. In addition, the banks sometimes like to see what we call ‘hurt money’. This means the banks want to see you as the borrower put some of your own cash on the line. So for Paul, we quickly arranged a refinance (to a much better rate of course!) and a top up so that he’d have some hurt money to throw in.

Suffice to say the lender approved the equipment loan off the back of his good character, cash flow projections, collateral and hurt money – the perfect mix for success!
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Paul is now about to set up shop for himself, a dream he has had for many years, and one that was well within reach once he realized how to go about arranging the finances. So, if you need equipment, talk to Liz about equipment finance!