With areas of NSW, TA and VIC flood effected, the impacts on many businesses will be immense in terms of machinery and crop losses, disruption to production and income and the emotional stress experienced. State governments have announced relief for flood victims and Prime Minister Albanese has also announced support through the federal scheme.
But many businesses, operators and producers will be requiring support which goes beyond what is offered in these government packages. To assist NSW, TAS and VIC flood impacted businesses, a range of finance is available to replace machinery and support operators through this difficult period.
Damaged Machinery Under Finance – Steps to take
With many key food producing regions impacted by the floods, many producers may have lost valuable agricultural machinery and equipment. If the machinery was under finance, then it should be covered by insurance. Lenders of secured equipment finance products do require that the equipment is insured as a condition of the finance.
In the event that machinery under finance has been written off or seriously damaged, business owners can take these actions:-
- Contact the insurer and advise of the situation.
- Many insurance claims can be lodged online or over the phone to speed up the process.
- The procedure for processing claims may vary for different insurers.
- The insurance company will advise what the process will be in the individual case.
- Assessors may be required to inspect the machinery to confirm if it is reparable or a complete write-off.
- If a write-off, the claim will be processed.
- The machinery would be held as security over the finance in the case of Chattel Mortgage and with other forms of finance – Leasing and Rent to Own, the lender holds an interest in the goods.
- The amount outstanding on the finance, including any balloon or residual, will need to be paid to the lender from the insurance claim.
- Any excess funds after the lender is repaid goes to the business.
While there are many, many issues for business operators to deal with in a flood situation, it can be important to get onto the insurance company as quickly as possible. Large numbers of claims are always lodged in these types of events and that can lead to delays in payouts. The faster a claim is lodged, the faster the matter can be resolved and the machinery replaced.
In regard to the finance, be aware that the monthly machinery finance payments will still be payable even after an insurance claim has been lodged. That is unless alternative arrangements are made with the bank or lender.
Banks and non-bank lenders are typically especially supportive during flood and other disasters. Operators should contact the lender to advise that the machinery under finance has been written-off and work out what arrangements can be made to pause the payments if business income is also disrupted.
If alternative arrangements are not made and the repayment schedule not adhered to, the finance may be deemed in default. This can impact the credit profile of the business which can lead to issues with new applications for finance.
Replacing Machinery – Finance Options
While many operators may have to wait some time to be operational again – waiting for floodwaters to recede and the clean-up to be completed, starting the process to acquire replacement machinery may be a priority. Some equipment and machinery may take time to be delivered so the sooner this process is commenced, the quicker the prospects of having the business up and running again.
In order to acquire replacement machinery, a new finance application may be required. Any funds received from the insurance claim may be used as a deposit on the new goods or for other business purposes.
But there is no need to wait until the claim is finalized before applying for new machinery finance. We can assist by handling the finance for the new machinery either as pre-approved finance if the equipment is still to be sourced or as a normal finance application if the machine has been ordered. The new machinery finance can be with the same or a different type of finance product from the one used for the original equipment. The finance application would be a new application and subject to an assessment by lenders of the business. The interest rate would be based on current rates.
Our consultants fully appreciate and understand what our customers in these situations are experiencing and work to make sourcing finance as streamlined and easy as possible by handling all aspects of the process. If you have any initial questions around process, timing and eligibility or any other matters, please contact us for prompt attention and answers.
Additional Finance Support
In addition to finance to purchase replacement machinery, there may be an urgent need for finance for other purchases or as ongoing operational support while the business recovers. This may include purchase of supplies, costs of clean-up and other expenses. We offer a range of solutions including Business Overdraft and Secured and Unsecured Business Loans which may suit these purposes.
As with the asset finance, our consultants will handle the finance process to alleviate operators of this burden.
Please feel free to contact to discuss your circumstances so we can offer solutions to support your business in these difficult times.
For finance assistance for Tas, Vic and NSW flood affected businesses, contact Jade Equipment Finance on 1300 000 003
DISCLAIMER: IF MISINTERPRETATIONS, MISREPRESENTATION OR ERRORS EXIST IN THIS ARTICLE, NO LIABILITY IS ACCEPTED. THE INFORMATION IS PROVIDED ONLY FOR GENERAL PURPOSES AND NOT IN ANY MANNER INTENDED AS THE ONLY SOURCE FOR MAKING FINANCIAL DECISIONS. THOSE THAT CONSIDER THEY REQUIRE ADDITIONAL GUIDANCE OR ADVICE SHOULD REFER TO AN INDEPENDENT FINANCIAL ADVISOR.
