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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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slide2
Access to Finance

Gaynor Dykes

slide4

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

slide6

Preparation

& Information

& Knowledge

slide7

Preparation

  • Purpose
  • Amount
  • Timescales
  • Repayment Period
  • Stake
  • Security
  • Costs
slide8

Information

  • Business Plan
  • Up to date accounts
  • Financial Forecasts
  • Supporting Information
slide9

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

slide12

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
slide13

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

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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

slide15

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

slide18

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?

access to finance what we do matching businesses with finance
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

turbulent times
‘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
external risks
Raw Material Costs

Risk of Bad debts

Exchange Rate Risk

Increasing Overheads

New legislation

External Risks
funding
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
efg scheme
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 equipmentEFG Scheme
natwest manufacturing fund
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
features
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
bringing back the cash
‘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
capital import finance scheme
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
benefits
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
slide35
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

national loan guarantee scheme
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
slide37

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

the north west fund funding inspiration event 7 th june
The North West Fund

Funding Inspiration Event 7th June

Julie Brook

Head of Marketing : North West Business Finance

Managers of The North West Fund

slide39
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

features1
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.

slide41

STRUCTURE

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

equity and debt funding
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

progress to date dec 2010 april 2012
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.

the investment process
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.

debt funding and the north west fund for business loans
Debt Funding and The North West Fund for Business Loans

Funding Inspiration Event 7th June 2012

fw capital
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

the fw capital team on merseyside
The FW capital team on Merseyside

Simon Berry

Senior Investment Executive

0151 600 5340 Mobile 07879 691478

Carol Bolland

Investment Executive

0151 600 5339 Mobile 07881 958582

Stephen Molyneux

Investment Executive

0151 600 5351 Mobile 07788 314653

equity investment and the north west fund for development capital
Equity Investment and The North West FUND for Development Capital

Funding inspiration event - 7th June 2012

yfm equity partners
YFM Equity Partners

Founded in 1982

Over £350 million of funds under management

  • VCT of the year 2011
  • VCT deal of the year 2011

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

the case for taking equity investment
The case for TAKING Equity investment

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.

the development capital fund the approach
The development capital fund - The Approach

Looking to invest in growth

Investing in new equipment or innovation

Developing new markets or geographies

Expanding workforce

Working capital funding

Business characteristics

£1m to £20m turnover

At or near profitability

Sensible gearing levels

Capable and ambitious management teams

Two products – Mezz & Equity

the development capital fund mezz
The development capital fund – MEZZ

Mezz

Investment £0.25m to £1.2m per round

12% interest, up to 10% equity option

Repayment up to 7 years

Simplified legal agreement

Company

Established businesses over 5 years trading history

Cash generative and generating at least £250k net profit

the development capital fund equity
The development capital fund – Equity

Equity

Equity (minority stake) and loan stock

Bespoke to company’s individual funding requirement

Investment £0.1m to £1.2m per round

Company

Profitable

Fast growing business

yfm equity partners in the north west
YFM Equity partners in the north west

Manchester T 0161 832 7603 Liverpool T 0151 600 5134

E [email protected]

Deborah Heyes

Simon Cleaver

Joseph Bergin

Paul Gower

Matthew Male

Ian Waterfield

Jerry Scriven

Sarah Riley

risks to consider
Risks to consider

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.

summary
SUMMARY

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.

slide67

Funding Inspiration Master Class

2nd July 2012

Liverpool Chamber

Through special application and assessment only through these taster events, please take an application form or apply on line at www.a2fnw.co.uk

SUPPORTED BY

funding inspiration master class 2 nd july liverpool chamber of commerce

Funding Inspiration Master Class2nd July – Liverpool Chamber of Commerce

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.

Free

SUPPORTED BY

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