Business Loan Failure to Survive and a Case Study
Lending institutions are a cornerstone of the American business world. Business owners and entrepreneurs commonly employ the services of banks and private lenders to secure financing in the form of SBA and other business loans to start, grow and generally improve corporate ventures in this country.
But considering the voluminous number of start-up businesses that don’t actually make it and fold is, I’m sure, alarming to lenders. Therefore, many checks, balances and hurdles are required when someone attempts to secure a capital advance. One such requisite demand of lenders is life insurance to indemnify the premature death of a borrower during a loan term. Banks will not close on most corporate loans without sufficient levels of life insurance backing said loans.
Simple term coverage is commonly assigned to address loan requirements, but frequently, traditional term life insurance is not available to a prospective borrower or not the right fit at the right time. Substandard health and impaired risks like drug and alcohol concerns often leave potential borrowers uninsurable and unable to secure the loans they need for their businesses.
Another dilemma is timing. Lenders usually place tight timelines on the application, approval and funding processes involving corporate loans, and frequently, borrowers struggle or fail to secure proper levels of life insurance in time.
Fortunately, Petersen International has the right solution to address all of these concerns. The Business Loan Failure to Survive (FTS) plan is a simplified-issue term product that provides a death benefit that can be appropriately assigned to a lending institution for the explicit purpose of covering a business loan. The product requires no exams or labs, just an application that can be underwritten, issued and assigned in a matter of days, not weeks or months. It is the perfect tool to meet the tight closing deadlines of most lenders. The FTS coverage can also be taken out by clients who are in underwriting for traditional policies, but are needing immediate coverage to close on their loan. Then they may cancel the FTS coverage once their approval comes in on the longer-termed product.
Furthermore, the loan FTS plan employs a more liberal underwriting methodology than that of most traditional life carriers. By shortening terms or by use of health exclusions or ratings, we are able to accept impaired risks that are usually declines or postponements with other insurance companies.
John Doe is a 47-year old restauranteur who sought a $1,500,000 business loan from a national bank to fund the expansion of his current restaurant and the purchase of a second location. Mr. Doe is in good health, but has a history of pain management opioid addiction, rehabilitation and an occurrence of relapse. He is currently taking Suboxone and has been clean for several years, but was uninsurable in the traditional life market. His agent sought the assistance of Petersen International, and we were able to underwrite, approve and issue the required insurance in five business days. He successfully closed on the loan and acquired the funding he needed to reach his business goals.
Please contract Petersen International at (800)345-8816 for a full rundown of the advantages of the Business Loan Failure to Survive program.