Quick answer
Yes. Most lenders won't lend against an undecided insurance claim, but they will lend against your business, an asset or a property while you wait. The usual approach is a short loan or line of credit sized to the weeks until the insurer pays, repaid from the payout. Once the claim is accepted in writing, more lenders become comfortable, and the amount you can borrow often rises.
Key points
- A claim that is lodged but undecided is rarely accepted as security; a written acceptance or settlement offer changes that
- For policies covered by the General Insurance Code of Practice, insurers generally have four months to decide, or up to 12 in exceptional cases such as catastrophes
- Ask the insurer about an advance payment first: under the Code it can be paid within five business days of showing urgent need
- Bridging finance can cost less than accepting a low cash settlement just because the business is short of money
- If a lender is noted on the policy as an interested party, it may need to sign off on how the payout is used
An insurance claim puts a business in an odd position. On paper you’re owed money, sometimes a lot of it. In the bank account, nothing has arrived, and the landlord, the staff and the suppliers don’t accept “the insurer is still assessing it” as payment.
Borrowing to bridge that wait is common and sensible, as long as the loan is built around the right question: how will this be repaid if the payout is late, smaller than expected, or both?
How long could you be waiting?
It helps to know the rules your insurer works to. The General Insurance Code of Practice, which covers many retail and small business policies, sets out a broad timetable. Check whether your policy falls under it; your insurer can tell you.
- Within 10 business days of receiving the claim, the insurer should accept or deny it, or tell you it needs more information or is investigating.
- Within four months of receiving the claim, it should generally make a decision.
- Up to 12 months is allowed where there are exceptional circumstances, such as a catastrophe, suspected fraud or delays caused by the claimant.
- Within 10 business days of having everything it needs, the insurer should make its decision.
Two points owners often miss. First, you can ask for the claim to be fast-tracked if you’re in urgent financial need, and the Financial Rights Legal Centre notes the insurer can pay an advance within five business days of that need being shown. Ask for this before you borrow. Second, you can complain about unreasonable delay even inside those timeframes, first to the insurer and then to AFCA.
After a widespread event like a flood or bushfire, expect the slower end of the range. That’s when bridging finance tends to earn its keep.
Will a lender count the money you’re expecting?
The answer depends on where the claim is up to. Lenders care about certainty, so each stage reads differently.
| Claim stage | How most lenders treat it |
|---|---|
| Lodged, not yet assessed | Ignored for security. You’re assessed on trading, assets or property |
| Assessor appointed, scope being agreed | Still ignored, though it helps explain the timeline |
| Claim accepted in writing | Some lenders factor the payout into how they’re repaid |
| Cash settlement offered or scope of works agreed | Clearer exit; a few lenders will lend against an assignment of proceeds |
| Disputed or partly denied | Treated as uncertain; the loan must stand on its own |
So in the early weeks, think of the claim as your exit strategy rather than your security. A lender wants to see the business can carry the loan, with the payout as a bonus that clears it early.
Is a quick cash settlement cheaper than borrowing?
Not always, and this is the trade-off worth slowing down for.
Insurers sometimes offer a cash settlement instead of managing repairs. If the offer is fair, taking it can be the simplest path. If it’s short of the real cost, a business that’s desperate for cash may accept it anyway, and that gap is permanent.
Compare the two in dollars:
- Accepting a low offer: you might receive $120k now on a claim you believe is worth $165k. The $45k difference is gone for good.
- Borrowing while you negotiate: a four-month short-term loan of $60k might cost somewhere around $5k to $7k in total fees and interest, depending on the lender and your profile.
If the negotiation has a reasonable chance of closing much of the gap, borrowing can be the cheaper decision. If the offer is close to fair, take it and skip the loan.
Need help weighing it up for your own claim? Send us the basics and we’ll talk it through.
Which kinds of finance suit the waiting period?
Banks are a good first call if you already bank with them and the business was trading well before the loss. Many banks have hardship teams that can pause existing repayments, and some will extend extra credit to a customer they know. Take that seriously; it’s often the cheapest money available. If the bank can’t help, or can’t help fast enough, these are the usual options.
- Short-term business loan: a short-term loan over three to twelve months, sized to the gap, repaid from trading and cleared early when the payout lands. Check what early repayment costs before you sign.
- Line of credit: a business line of credit suits a wait of unknown length, because you draw only what you need and pay interest only on what you’ve used.
- Equipment finance: if the loss was machinery or vehicles and the business can’t wait for replacement, finance the new asset and use the payout to reduce debt later.
- Property-secured: for larger claims, such as fire damage to premises, a caveat loan or second mortgage over another property can fund the rebuild while the claim runs. These are assessed on equity, so a slow insurer matters less.
Don’t forget the renewal. If your premium falls due while you’re mid-claim, insurance premium funding spreads the cost so cover doesn’t lapse at the worst possible moment.
What about lenders already noted on the policy?
If a bank or other lender holds a mortgage over the damaged property, it is often noted on the policy as an interested party. That can mean the insurer needs the lender’s consent before paying out, or pays part of the proceeds to the lender directly.
This matters when you plan a bridging loan. If you’re counting on the payout to clear new debt, confirm early who the insurer will actually pay. Ask your existing lender in writing whether it will release funds for repairs or apply them to its own loan.
Worked example: a café kitchen fire
The figures here are invented for illustration.
A suburban café has a kitchen fire. It’s closed for repairs and the claim covers equipment, fit-out and business interruption. The insurer appoints an assessor in week two and indicates a decision may take three months because of the builder’s quotes.
The owner needs $55k to pay two key staff (to keep them), order replacement equipment with long lead times and cover rent. The bank offers a pause on the existing equipment loan but can’t add new credit quickly.
A non-bank lender approves a $55k line of credit on the strength of two years of solid statements before the fire. The owner draws $40k over three months, and total interest and fees come to about $3.5k. When the claim is paid in month four, the line is cleared and closed. Our cash flow gap calculator is a good way to rough out a similar timeline.
Mistakes to avoid while you wait
- Borrowing the full claim amount. Borrow for the gap, not the payout. You’re paying for every week the money sits idle.
- Assuming the payout will arrive on a set date. Build in a buffer of at least a month.
- Not asking for an advance. It’s free money from your own claim, and many owners never request it.
- Signing a settlement release without reading it. Once signed, reopening the claim is difficult.
- Forgetting tax. Business interruption payments are generally assessable income, so talk to your accountant before you spend them twice.
The claim will come through; keep the business ready for it
You don’t have to choose between a fair claim and a functioning business. A sensibly sized bridge can carry you to the payout without forcing a rushed settlement.
The form is short, about sixty seconds, and filling it in has no effect on your credit file. We won’t pass you along to a long list of lenders, so you can expect one call rather than a flood of them. A member of our team looks at your claim stage, your trading and what you need, then rings to discuss it properly. Tell us what’s been lodged, what the insurer has said so far and what the business actually needs each month; that accuracy is what gets you matched well on the first go.
Frequently asked questions
Can I use my insurance claim as security for a business loan?
Not usually while the claim is still being assessed, because the lender can't be sure how much will be paid or when. After the insurer accepts the claim in writing, some lenders will take the expected payout into account, and a few will lend on an assignment of the proceeds.
How long does an insurer have to decide my claim?
For policies covered by the General Insurance Code of Practice, the insurer should decide within four months of receiving the claim, or within 10 business days once it has all the information it needs. In exceptional circumstances, such as a catastrophe or suspected fraud, the decision can take up to 12 months.
Should I accept a cash settlement to get money faster?
Only if the figure is fair. If the offer is well short of the real cost of repair or replacement, compare the shortfall with the cost of borrowing for a few more months while you negotiate or dispute it. Short-term finance is often the cheaper of the two.
What if my insurer denies the claim after I've borrowed?
The loan still has to be repaid, which is why it should be sized to what the business can repay from trading or other assets, not only from the payout. You can complain to the insurer and then to AFCA, but plan the loan as if the dispute might take a while.
Will a lender worry that I'm in a dispute with my insurer?
It depends on the size of the dispute relative to the business. A lender will want to know what happens to repayments if the claim pays less than expected. A clear answer, such as a property to fall back on or steady trading income, usually settles the question.