January is done and your arrow aimed at renewal premiums has hitits target. Now what have you got in your quiver to boost yoursuccess rate for the rest of the year—or at least until the heavyrenewal months of July and October?

Ask yourself this: What would prompt a successful foodmanufacturer, an established property company, a technologystartup, a chain of restaurants, a mining corporation, across-border cold storage company and a group of law firms all tofinance their business insurance premiums?

The answer lies in the cash flow needsof those businesses, along with the ability of their agent orbroker to target those needs by presenting premium financing as asource of funding.

These examples are actual clients. Some of the smaller companieshave been squeezed for cash as the economy weakened and creditbecame tight. A more common reason given for financing, however, isthat the chief financial officers and accounting departments weresimply managing cash flow and unlocking the underlying value oftheir insurance premiums.

Their objectives included wanting to expand business, finishprojects, boost working capital, or smooth out the payments fortheir insurance costs.

Explaining and offering insurance premium finance turned out tobe additional arrows in the quiver of savvy agents and brokers, andjust as useful for prospecting and increasing an agent's value toclients as the early arrows were for hunting success andsurvival.

Given the recent recessionary environment along with creditcrunch conditions, borrowers are often surprised at how fast andeasy it is to complete a premium finance transaction. Understraightforward circumstances, the loan documentation is usually atwo-page contract, and with the collateral tied to the unearnedportion of the premium many loans provide funding within 24 hoursof contract acceptance.

What's more, historically low interest rates and competitionamong premium finance providers, (arch…ery rivals?) have been goodnews for borrowers.

Your real value-add comes into play when you understand yourclients' businesses and link different financing options withdiffering borrower needs. Although you don't need to be an expertin premium finance to advise your clients, a two-hour, in-agencycontinuing education (CE) course offered by some companies goes along way to increasing understanding.

“Choosing the right arrow for your bow andshooting style is critical to getting your perfect shot.”

That piece of archery advice translates well in the premiumfinance environment. Like the most popular and most economicallypriced wooden arrow, premium finance standard plans such as the 20percent or 25 percent down and nine equal installments attract thegreatest number of borrowers and generally require the least amountof underwriting.

Experienced archers prefer a carbon composite arrow whereperformance is clearly superior, even though the cost is expensive.Likewise a 12-equal-premium finance-repayment plan will give yourclient the maximum cash flow benefit but will likely cost more.

Aluminum arrows represent the midrange in price along withconsistent performance. A 10 percent down payment with 10 equalinstallments will give clients similar midrange benefits, whereasan eight equal repayment plan (the fiberglass arrow choice) is bestfor clients focused on the cost of debt service.

Another measure of arrows is theflexibility of their spines. Some premium finance companies offerflexible seasonal repayment plans that are customized to reflectthe in and out cash flows of businesses such as resort hotels,vineyards or other agricultural ventures, or travel companies.

More specifically, think of the fletching (materials such asfeathers) at the base of an arrow which is used to balance theweight of the arrowhead. Then consider the liability policy of aski resort, for example, as an arrowhead and the auditable policiesestablishing the seasonal level of risk based, say, on salesreceipts as the fletching. If you match that information in atailored repayment plan, premium financing can help steady the skiresort's cash flow.

Finally, let's not forget those arrows that are customized tothe user's body and for specific purposes. Customized financesolutions could include funding insurance for companies in Chapter11 when they are most strapped for cash or in Chapter 7 where thetrustees are able to finance the premium with a proper courtorder.

Scientists believe the arrow has been around for 25,000 years.Premium financing got its start in the 1950s and is quite ready topractice the wisdom of its much older role model:

“Each element must be balanced in proportion to the otherand to the user to make an effective tool.”

Go ahead. Give your clients your best shot.