Financing Benefits
Your captive insurance company can make loans to your business up to 45% of the captive’s liquid assets. The parent company can use these funds for various purposes, such as working capital, acquisitions, capital expenditures, or debt refinancing.
You Control the Financing
By lending from your captive insurance company, you take control over your financing options. You access funds on your terms, without dealing with external lenders.
Tax Benefits
The interest payments are income for your captive insurance while being a tax deduction for your operating business. Your captive will likely pay a lower tax rate, providing you with overall tax savings.
Risk Management and Financing Integration
Lending from your captive insurance company allows your parent company to integrate its risk management and financing strategies. You have control of both.
Advantages
- Short underwriting timeframe: couple weeks or less.
- Tax advantages:
- Your captive insurance company keeps all the interest income.
- Your captive pays 21% corporate tax rate on the interest income.
Disadvantages
- Need to provide sensitive information.
- Long underwriting timeframes.
- Uncertainty of approval.
