Flood support for business in the current crisis may be available through government relief and through finance options to replace equipment and other purposes. The current flood crisis is impacting many operators in Tasmania, New South Wales and Victoria and both Queensland and South Australia may also be affected in coming weeks. The Bureau of Meteorology and authorities have warned that more heavy rain and severe weather conditions are in the forecast. We are acutely aware that many producers have lost crops which were ready for a bumper harvest, operators have lost equipment and machinery and many business owners have lost livelihoods or have had serious disruptions to businesses. Immediate relief may be sought through relevant state schemes and through the Federal Government packages. For many operators, the need will be to replace equipment which is currently under finance and/or to source finance and loans to acquire ag supplies and provide general financial support moving forward. Actions need to be taken for equipment under finance which has been lost in floods, which we will explain. In addition, a range of options are available to assist flood-affected businesses get back in business. Flood-damaged Equipment Under Finance Where machinery and equipment which is currently finance is deemed unserviceable or written-off as a result of flood, there is a procedure to be followed to make a claim and replace the goods. Secured equipment finance products include the condition that the goods be insured and that insurance coverage to extend over the full finance term. Where equipment under finance is written off:-

• Contact should be made with the insurer as quickly as possible to lodge the necessary claim.
• Some insurers offer an online claim service.
• Insurers may vary in their approach to business claims and each will advise of their process.
• Widespread flood events do result in a large number of claims being filed so being quick to act may expedite the claim.
• The business is still responsible to meet the finance payments on the equipment even after lodging an insurance claim. Unless arrangements are made with the lender.
• The lender should be contacted and advised of the situation. Lenders will have varying approaches to these circumstances. Some may be prepared to pause repayments and await the finalisation of the claim.
• Where the business is unable to meet repayments due to income disruption, this should be conveyed to the lender and a solution sought.
• When the claim is approved by the insurer, the lender will be paid out the balance of the finance contract as stipulated.
• Any additional funds from the claim would be paid to the business.

It is very important to note the issue around continuing to meet the repayment schedule. Failure to do so can result in downgrading of the business credit profile or a default. This can lead to issues when new finance applications are made. A higher interest rate may be the outcome or a worst case scenario is that Bad Credit Equipment Finance may be required. Most lenders will have set policies in place to support businesses that have been affected by floods and are in general, quite supportive. Replacing Equipment Under Finance There is not a requirement to wait until the insurance claim is settled before commencing to apply for finance to replace the equipment and machinery. Businesses are welcome to contact us to start that process at any time to ensure the new machinery is acquired and operational as soon as possible. One point which is worth mentioning in this regard is the existing finance liability. When approaching a lender directly, the business may have may find issues with their balance sheet still showing the current equipment under finance as a liability. This may have potential to attract a higher interest rate as a result of the lender’s assessment of the application. By engaging us to handle the finance sourcing, our consultants can explain the circumstances and work to negotiate through this issue with the lender. New finance may be with the same or a different lender to the finance on the existing equipment; may be with the same or a different finance product; and will be quoted at the current interest rates. If operators prefer to wait until they receive the pay-out from the insurer before proceed to acquire replacement machinery, pre-approved finance may be sought. This ensures the application is processed through to the  approved stage. Business owners can then quickly act and order the new equipment in a timeframe that suits them, within the validity time of the pre-approved finance. Finance for replacement equipment would still be eligible for the relevant tax deductions such as currently available through temporary full expensing with Chattel Mortgage. Additional Business Support We also offer further support for business via a Business Overdraft Facility and Business Loans. These can be extremely helpful in situations where a business will need time to recover from the flood event and has expenses to be covered immediately with income impacted. We appreciate this is a very difficult time for many business owners and we welcome your call to discuss the solutions we may be able to offer to assist and support. Contact Business Finance on 1300 000 033 to discuss flood support for business DISCLAIMER: THE SPECIFIC PURPOSE IN PROVIDING THIS ARTICLE IS FOR GENERAL INFORMATION ONLY. IT IS NOT INTENDED AS THE SOLE SOURCE OF FINANCIAL INFORMATION ON WHICH TO MAKE BUSINESS FINANCE DECISIONS. BUSINESS OWNERS WHO REQUIRE ADVICE OR GUIDANCE AROUND THEIR SPECIFIC FINANCIAL CIRCUMSTANCES ARE RECOMMENDED TO CONSULT WITH AN ADVISOR OR ACCOUNTANT. NO LIABILITY IS ACCEPTED IN REGARD TO ANY MISREPRESENTATIONS OR ANY ERRORS RE ANY DATA, SPECIFICS, POLICIES AND OTHER INFORMATION AS SOURCED FROM OTHERS.