Funding Inspiration. SUPPORTED BY. Access to Finance. Gaynor Dykes. Is finance really available?. 3 years accounts Profitable trading record Forecast steady growth Regular, positive cash flow
Is finance really available?
Profitable trading record
Forecast steady growth
Regular, positive cash flow
Good credit profile
Healthy order book
Demonstrable market demand
No/limited trading record
Very high growth
Erratic cash flow
No personal risk
Blemished credit profile
C O N F I D E N C E & C R E D I B I L I T Y
Alternative Finance Options
Public Sector Finance?
Cash flow £?
Enterprise Finance Guarantee?
emphasis on accurate cash
forecasting in a “cash burn”
environment, and encouragement
for imaginative solutions’
Cash Management Spring 2011
A supplement to The Treasurer
Principal Sponsor RBS GroupTurbulent Times
Risk of Bad debts
Exchange Rate Risk
New legislationExternal Risks
Overdraft / Loan right way? (at the right time?)
Invoice Finance (bad debt protection)
Enterprise Finance Guarantee Scheme (EFG)
NatWest Manufacturing Fund Scheme
Capital Import Finance
National Loan Guarantee Scheme (NLGS)Funding
Summary right way? (at the right time?)Initiative supported by the GovernmentBusinesses with turnover less than £25M Where there is no other security available to the bank and all other funding options have been exploredMin loan £1K – 1M. Term max 10 yearsPurpose ~ funding expansion , working capital or equipmentEFG Scheme
Designed to support businesses in the manufacturing sector, this initiative is supported by up to £1bn of funds.
The fund should be used alongside the existing options of traditional finance, including Lombard and Invoice Finance, to ensure that we provide the best funding structure for our customers which can be accessed on a variable rate or at specially agreed fixed rates.
Purpose of Loan
Loans can be used virtually any purpose and include :
General capital expenditure
Working CapitalNatWest Manufacturing Fund
Minimum Fixed Rate Loan amount £100,000, maximum £25m this initiative is supported by up to £1bn of funds.
Fixed Rates (3 or 5 year fixture periods) are available; terms must match the fixed rate periods
Fixed Rate Loans are provided on an interest-only basis during the 1st 2 years of a fixed rate period.
Regular capital repayments may be made from the 3rd year of the facility. Such repayment programmes must be agreed at the outset of the loan, & whilst payments may be amortised over longer periods, the commitment will only be for the initial 3 or 5 years.
Loans must be drawn as a single advance; it is not possible to draw the loan in stages.Features
‘Trading Internationally brings this initiative is supported by up to £1bn of funds.
new sources of customers & revenues.
However, it also brings specific
Financial risks that need
To be controlled’
Cash Management Spring 2011
A supplement to The Treasurer
Principal Sponsor RBS GroupBringing Back the Cash
Can better use be made of Letters of credit to deliver better terms of supply and payment?Letter of Credit
Developed with support of Lombard and RBS Global Transaction Services to create a one stop funding package to acquire Plant and Machinery from abroad
Step 1 ~ After you have selected supplier of equipment Lombard issues a formal conditional offer to finance the equipment through an asset finance facility. Offer valid for 270 days to allow asset to be built , shipped and commissioned
Step 2 ~GTS tailor short term trade finance facility (LoC structure / Import Loan)
Step 3 ~ Once machinery imported Lombard uses agreed asset finance facility to repay GTS.Capital Import Finance Scheme
Working with GTS the importer, be assured of supplier payment, may have opportunity to negotiate improved terms
GTS can help protect the interests of the importer ensuring payments are only released when contractual obligations are met
Asset Finance agreed upfront is bridged by a LC structure rather than cash being paid out upfront
Payment structure matched to customer needs and help manage budgets with some certainty
End to end solutionBenefits
Undisclosed payment, may have opportunity to negotiate improved terms
2.3M Funding Package
546K Manufacturing Fund Loan
Knowsley based Manufacturer became the first North West business to benefit from the Manufacturing Fund
The Specialist manufacturer needed the funding to help cover the costs of orders worth £2M
It secured 546K loan from the Manufacturing Fund as part of £2.3M finance package which also included finding via the EFG scheme and Invoice Finance
382K Capital Import Finance
Lombard agreed to finance new manufacturing Line against irrevocable deferred import Letter of credit
Payment against agreed milestones and sight of commissioning certificate
At final maturity date Lombard draw agreed 288K under lease agreement. Balance 94K paid by bank customer
Access more affordable Business Finance with the National Loan Guarantee Scheme.
What is NLGS ?
The National Loan Guarantee Scheme (NLGS) was launched in the 2012 budget and is a Government backed bond guarantee scheme.
By participating in NLGS banks will offer an equivalent benefit of 100bp to customers who have turnover less than £50M and are within their State Aid limits.
Who is the NLGS for ?
NLGS is for UK Mid Corporate and SME customers who have a turnover of less than £50M and are seen to be making a material contribution to UK economic activity.
Eligibility can include branches of foreign companies with genuine businesses in the UK.
Who is participating ?
Scheme is available through NatWest Commercial and Business Banking and Lombard.National Loan Guarantee Scheme
Manufacturing Fund £1B Loan Guarantee Scheme.
Funding for manufacturing sector
Loans 100K – 25M yrs interest only
Fixed rate loans 3 & 5 yrs. 1% arrangement fee
Option for variable rate. Standard fees to apply
UK Capital Expenditure Fund £1B
Lombard Scheme ~ fund acq of Business Assets
Includes joint initiative with GTS ~Capital Import Finance Scheme
Specialist support for import of plant and machinery
NatWest Regional Growth Fund £70M
Grant support for eligible Businesses
To support asset purchase where we cannot lend under
Linked to Job creation/ retention
Franchise Fund £100M
2 yrs Free Banking
Discounted Arr fees
www,natwest.com/franchise tel 0800 092 9117
Renewable Energy Fund £50M
Fund targeted at renewable energy market
Managed through the Agricultural Teams
0800 092 9116 / Dave Furnival BDD 07818 427117
Community Business Loan Fund £5m
Loans 30K – 500K ~
Eligible ~ Social enterprises, Charity & Community Interest Companies
200K # 1M
Eligible ~ Development Finance Institutions
The North West Fund Loan Guarantee Scheme.
Funding Inspiration Event 7th June
Head of Marketing : North West Business Finance
Managers of The North West Fund
Background Loan Guarantee Scheme.
The North West Fund – £185m investment fund from ERDF and EIB
“Gap funding” focused on growing North West SMEs.
Combines financial return with economic benefits.
Designed to create a lasting legacy fund for reinvestment.
Co-investment will increase fund fire power to c£400m.
Must be invested by end 2015
FEATURES Loan Guarantee Scheme.
Supports funding requirements of growing SMEs through a range of debt and equity finance solutions.
Improve survival of new businesses, assist key sectors in NW
40% for Merseyside, otherwise a broad geographic mandate.
Wide investment range (£50k to £2m) and already matched.
Eligibility – B2B
Create/safeguard 14,000 jobs, generate £700m GVA (£250m by 2015) from investment into around 800 businesses.
Establish a major, single branded NW venture capital and loan fund.
STRUCTURE Loan Guarantee Scheme.
NWBF is a holding fund, managing six experienced Fund Managers, each targeting a discrete segment of the market.
Equity and debt Funding Loan Guarantee Scheme.
Equity funding means minority stakes in our invested businesses
Debt Funding – risk return approach
Investment Fund with a difference – job creation targets and GVA for the region.
Get more than just the money, we have expertise and networks
Rigorous investment process
ERDF and EIB support.
Minimum of £50k
Extended networks for next stage growth
Progress to date Loan Guarantee Scheme. Dec 2010-April 2012
£23m has been invested into over 95businesses (inc 18 follow-on)
Co-investment of over £17m has been secured in support of our own investment
Average investment is c£250k
£6.9m of investment in Merseyside into 29 businesses
Strong pipeline of applications currently being assessed or completed
“Out of area” applications account for 12% by number and, in our sector funds, account for as much as 35%
Demand for funding from established businesses being outstripped by early stage businesses
Entrepreneurs from their 20’s to 60+ have been backed so far.
The Investment process Loan Guarantee Scheme.
Apply online – eligibility check list and application form
Good business plan helps progress to next stage –format on website
The appropriate fund manager should be in touch within a week
From assessment to decision can take from 4 weeks to 6 months - depending on circumstances.
Debt Funding and The North West Fund for Business Loans Loan Guarantee Scheme.
Funding Inspiration Event 7th June 2012
FW capital Loan Guarantee Scheme.
FW Capital is part of the Finance Wales Group
£387 million of funds under management
FW Capital manages:
£20 million North East Growth Plus Fund
£35 million North West Fund for Business Loans
lending criteria Loan Guarantee Scheme.
LENDING criteria Loan Guarantee Scheme.
case: control valve solutions Loan Guarantee Scheme.
Property Purchase Loan Guarantee Scheme.
Working Loan Guarantee Scheme.capital
asset Loan Guarantee Scheme.purchase
Lack Loan Guarantee Scheme.of trading history
THE Liverpool recruitment Loan Guarantee Scheme.coMPANY
The FW capital team on Merseyside Loan Guarantee Scheme.
Senior Investment Executive
0151 600 5340 Mobile 07879 691478
0151 600 5339 Mobile 07881 958582
0151 600 5351 Mobile 07788 314653
Funding inspiration event - 7th June 2012
Founded in 1982
Over £350 million of funds under management
Offices in London, Leeds, Manchester, Bristol, Sheffield and Liverpool
Over 50 employees
Portfolio of over 200 companies
The UK’s most active equity investor in small businesses*
* Source: Private Equity Insight - based on the number of deals completed between £100k and £10m in the five years to May 2011
Equity funding is the only way to “step change” a business.
Banks lend on certainty – assets, contracts and past performance - limiting appetite.
Equity invests on potential, ambition and future value - hence has “no limitation”.
Equity is more patient and more forgiving.
You get more than “just the money”.
Don’t think in terms of “giving up a slice of the cake”; rather think “how big can I make the cake?”
Equity investment should be seen as a “badge of honour” and not a sign of failure.
Looking to invest in growth
Investing in new equipment or innovation
Developing new markets or geographies
Working capital funding
£1m to £20m turnover
At or near profitability
Sensible gearing levels
Capable and ambitious management teams
Two products – Mezz & Equity
Investment £0.25m to £1.2m per round
12% interest, up to 10% equity option
Repayment up to 7 years
Simplified legal agreement
Established businesses over 5 years trading history
Cash generative and generating at least £250k net profit
Equity (minority stake) and loan stock
Bespoke to company’s individual funding requirement
Investment £0.1m to £1.2m per round
Fast growing business
It is in the nature of venture capital investments that considerable uncertainties exist in relation to the ability of individual Investees to establish themselves as viable businesses.
As there will normally be no ready market in the securities of the Investees such investments will be essentially illiquid and may be difficult both to value and to realise.
Any proposed investments are likely to involve an above average level of risk.
Investment through a fund in developing businesses should be regarded as long term and as carrying a significantly higher degree of risk than more conventional forms of investment.
Any interests in a fund itself will also not be readily marketable.
Past performance of YFM Equity Partners or any of its subsidiaries and employees does not provide any guarantee of future performance.
This presentation is addressed only to ‘Investment Professionals’ within the definition of Article 14 of the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) Order 2001 and Article 19 (5) of the Financial Promotions Order. It is only meant for investment professionals with professional experience of the subject matter. It is issued for information purposes only and should not be construed as advice, nor does it constitute an offer and should not be relied on by any other person. It may not be copied or distributed or otherwise made available to any person without the express written consent of YFM Equity Partners Limited.
YFM Private Equity Limited (FRN :122120) and YFM Venture Finance Limited (FRN:224728) are authorised and regulated by the Financial Services Authority. They are wholly owned subsidiaries of YFM Equity Partners Limited which is part of the GLE Group of companies. YFM Equity Partners Limited is registered in England and Wales, Co No 4848599. Registered office: Saint Martins House, Chapeltown Road, Leeds LS7 4HZ.
Potentially £400m of investment capital targeted at SME growth.
Must be invested by end 2015.
Comprises six Fund Managers with extensive relevant experience.
Opportunity for North West SMEs to capitalise on this funding to generate prosperity and employment.
Can stimulate ambition to allow owners and managers the potential to step change their business.
Building on expertise that already exists to create an enduring legacy.
The North West Fund is inspiring entrepreneurs.
We are looking to inspire more.
Funding Inspiration Master Class Capital
2nd July 2012
Through special application and assessment only through these taster events, please take an application form or apply on line at www.a2fnw.co.uk
How to attract a lender or an investor
How to make a strong case for funding
How to produce a credible and readable business plan
Preparing and presenting your financial information.
Understanding legal terms and conditions of funding.