An Overview of Annuity Financing


Annuity financing is quickly becoming a popular way to fund various business ventures. When a business owner is looking to generate funding for a new direction or a new satellite location, he or she often starts at the bank. If a business is smaller or newer, this presents a problem. Banks require business loan applicants to give them access to a variety of sources of information detailing creditworthiness, address information and business history in order to make a decision about the company’s future. Annuity funding uses various types of accounts in different borrowing situations in order to get fast, convenient money.

Types of Accounts

In order for an entrepreneur to get an opportunity for applying to an annuity financing package, he or she must own an annuity. An annuity is an amount of money that is sometimes offered to consumers in situations where long-term saving makes sense. Funds are paid and increased over time to build up to a large sum of money. Once the funding part of the annuity is completed, the annuity can begin to be paid to the account holder. With loans from these types of accounts, a borrower typically has a mature annuity that may or may not have started paying out. The borrower simply gets a larger sum of money than a monthly payment would be.

Borrowing Situations

The situations in which annuity financing is used are typically related to small or growing business costs. One of the most common uses of this type of funding is for working capital, which is the money used to run an organization on a daily basis. Another use of the money from this loan is growth capital. If a firm is ready to start expanding, it may be a good idea to go with an annuity loan. Instead of accumulating more debt to grow, the annuity money can finance the latest additions to an organization.

Repayment Options

Lastly, an annuity loan gives the consumer different types of payment options. Repayment is about more than fulfilling your contractual obligation. It’s also about fulfilling your own responsibility to your future self, by making the right choices in the present. Quickly repaying the loan when you are required to do so can make your own finances that are coming down the road, work much more efficiently and effectively.

Many business owners are finding success with annuity financing as a funding source. This kind of funding is an easy and quick process that lets a borrower use money from an existing account in different types of business settings in order to ultimately pay off your own money after investing into more company resources for the present.