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Funding Inspiration

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

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Funding Inspiration

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  1. Funding Inspiration SUPPORTED BY

  2. Access to Finance Gaynor Dykes

  3. Is finance really available?

  4. 3 years accounts Profitable trading record Forecast steady growth Regular, positive cash flow Experienced owners/managers Personal commitment Good credit profile Healthy order book Demonstrable market demand No/limited trading record Past losses Very high growth Erratic cash flow Unproven owners/managers No personal risk Blemished credit profile Unconfirmed orders New/unproven market

  5. What can I do to improve my chances of success?

  6. Preparation & Information & Knowledge

  7. Preparation • Purpose • Amount • Timescales • Repayment Period • Stake • Security • Costs

  8. Information • Business Plan • Up to date accounts • Financial Forecasts • Supporting Information

  9. Knowledge • What type of finance product? • Which provider? • Terms and conditions? C O N F I D E N C E & C R E D I B I L I T Y

  10. What are my options?

  11. Debt or Equity? or both??

  12. Debt Pros (typically) • No surrender of shares • Known repayments and repayment period • Quicker, simpler to arrange • Debts are tax deductible Cons • Evidence of repayment ability • Personal and business security required • Can be inflexible • Terms, conditions and covenants • Risk of becoming over geared

  13. Equity Pros (typically) • Equity is risk money. • Appropriate at start-up stage through to maturity • Equity investors can often provide valuable expertise and contacts • Allows flexibility to step change a business Cons • High growth businesses only that can provide the investor with a return • Investors require a percentage shareholding in return for cash • Investors may require decision making authority • Lengthy process with extensive due diligence • Legal and professional fees Mezzanine

  14. Banks • Invoice Finance • Asset Finance – HP/Lease • Trade Finance • Social Enterprise and specialist finance • Bridging Finance • Commercial Mortgages • Business Angels • Venture Capital • Private Equity • Peer Lending Finance Options

  15. Small Business Loans £3,000 to £50,000 • Merseyside Special Investment Fund • The North West Fund • £50,000 - £250,00 loan • up to £2 million equity • The Social Enterprise Loan Fund - up to £250,000 • NW Business Angels £10,000 to £500,000 • Enterprise Finance Guarantee Scheme £1,000 to £1million • Regional Growth Fund • Local initiatives • Rural Development Programme • Coalfields Fund • Technology Strategy Board • etc, etc ... Alternative Finance Options

  16. North West Business Angelswww.nwbusinessangels.co.uk

  17. What help can I get?

  18. Private Equity? £ ? Asset Finance? Public Sector Finance? Loan? £ ? Financial forecasts? Invoice Discounting? £ ? Overdraft? Cash flow £? Business Plan? Grant? Venture Capital? £ ? £ ? Enterprise Finance Guarantee? Business Angel? Management accounts? Bridging finance?

  19. Access To Finance – What We Do‘Matching Businesses with Finance’ • Ensure viable Northwest based SME’s are investment ready • Support the process of obtaining appropriate funding • UNIQUE SELLING PONTS: • Impartial • Independent • Credible/Experienced/Knowledgable Team • Complimentary • Free to use www.a2fnw.co.uk

  20. Access To Finance – How We Do It www.a2fnw.co.uk

  21. Access To Finance – Contact Details www.a2fnw.co.uk enquiries@a2fnw.co.uk www.a2fnw.co.uk

  22. Cashflow & Accessing Finance

  23. ‘There is an increased 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 Group Turbulent Times

  24. Raw Material Costs Risk of Bad debts Exchange Rate Risk Increasing Overheads New legislation External Risks

  25. Are we funding Asset Purchases and Working Capital in the right way? (at the right time?)

  26. Overdraft / Loan Invoice Finance (bad debt protection) Enterprise Finance Guarantee Scheme (EFG) NatWest Manufacturing Fund Scheme Asset Finance Capital Import Finance National Loan Guarantee Scheme (NLGS) Funding

  27. SummaryInitiative 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 equipment EFG Scheme

  28. 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 : Business acquisitions General capital expenditure Working Capital NatWest Manufacturing Fund

  29. Minimum Fixed Rate Loan amount £100,000, maximum £25m 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

  30. ‘Trading Internationally brings 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 Group Bringing Back the Cash

  31. Can better use be made of Letters of credit to deliver better terms of supply and payment? Letter of Credit

  32. 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

  33. 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 solution Benefits

  34. Undisclosed 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 Undisclosed 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

  35. 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

  36. Manufacturing Fund £1B 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 www.capex.lombard.co.uk Includes joint initiative with GTS ~Capital Import Finance Scheme Specialist support for import of plant and machinery NatWest Funds NatWest Regional Growth Fund £70M Grant support for eligible Businesses To support asset purchase where we cannot lend under normal criteria Linked to Job creation/ retention www.bis.gov.uk/rgf Franchise Fund £100M 2 yrs Free Banking 12m crh 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 www.Natwest.com/agriculture 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 www.natwest.com/communitybusinessloan

  37. The North West Fund Funding Inspiration Event 7th June Julie Brook Head of Marketing : North West Business Finance Managers of The North West Fund

  38. Background 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

  39. FEATURES 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.

  40. STRUCTURE NWBF is a holding fund, managing six experienced Fund Managers, each targeting a discrete segment of the market.

  41. Equity and debt Funding 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

  42. Progress to date 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.

  43. The Investment process Visit www.thenorthwestfund.co.uk 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.

  44. Debt Funding and The North West Fund for Business Loans Funding Inspiration Event 7th June 2012

  45. FW capital 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

  46. lending criteria

  47. LENDING criteria

  48. case: control valve solutions

  49. Property Purchase

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