Taking the Fear out of Loan Finance Raising Loan Finance to Develop Your Organisation

1. Taking the Fear out of Loan Finance Raising Loan Finance to Develop Your Organisation 13th December 2011 Roy White NW Regional Director The Social Enterprise Loan Fund

2. A different approach? Grant v Sustainability Shackles v Freedom Short Term v Medium Term Direction v Making a Difference

3. Making the LEAP! from Grant Application to Loan Application Differences and Similarities Common Purpose – to raise money! Grant Applications Rigid Structure Concentrates on “outcomes” Needs to demonstrate “fit” with national and local policy Both require a Business Plan Loan provides more “freedom” for the organisation’s “spirit” to come through, although basic content is fairly constant Identify common elements of both – as you complete the grant application, write them down so that you can more easily translate them into the Business Plan Ensure consistency between grant application business plan and financial forecasts Provide a lender with a copy of the grant application, but don’t anticipate a decision on that alone!

4. The Business Plan for Loan Application • Style • Written with the intended reader in mind • Simple to read • Not too long • Avoid jargon • Use appendices • Understand what a potential lender is looking for

5. Introduction / Background Information Executive Summary History of your organisation Legal Structure of your organisation – Company Limited by Guarantee? Registered Charity ? What your organisation does Where it is based Who are the key players What funding is being requested and why Who are the other parties? Brief Financial History Brief Forecast How much £££££ are you asking and how long do you want pay it back over!

6. Market What is your marketplace? Local issues/Local needs Who are your customers? How will you find your customers How do you know that a need exists? Evidence – market research? What is your competition (today and in the future)? How will you protect yourself from it and maintain your position?

7. Who are the People Involved Brief background of all relevant management team and other key personnel Include, qualifications, work experience in all sectors Management Structure Chart, showing how the organisation works together, reporting lines, responsibilities

8. Financial Analysis and Forecasts Track Record! Commentary on past three years trading performance Highlight key facts and figures – draw attention to fluctuations. Get the explanations out front!! Cashflow and profit forecasts (at least 12 months) Commentary on any differences between historic and forecast future performance – where is the growth coming from? Breakeven Point?

9. Facilities Required How much is required? Structure of funding required? Loan, overdraft, invoice factoring, etc? Security available to lender? Personal Guarantees?

10. Affordability • Cashflow forecasts to include capital repayments and interest • Any capital holiday period required? • Ability to absorb increased interest rates? • Ability to weather downturn in turnover? • Summary • Very brief • Restate the positives

11. Appendices Historic accounts Cashflow, balance sheet and profit forecasts CV’s/Profile Information sheet – details of current bankers, accountants, solicitors, etc., including addresses and telephone numbers, governance documents Historic bank statements Property valuation reports (where appropriate) Marketing literature/brochure

12. Differences Banks CDFI Credit Score Credit Check Security security Time TIME Profitability Breakeven Shareholders Social Enterprise/Charity

13. The Social Investment Business Future Builders Social Enterprise Investment Fund Community Builders Fund Modernisation Fund Full Investment Fund Growth Fund Outreach Fund Development Cash flow Fund Innovation Fund Emerging Enterprise Fund Feasibility Collaboration Fund Tender Fund Right to Request Fund Investment Consortia Fund Tender Fund Government backed National Schemes

14. Independently run Finance Organisations Triodos Bank Co-operative & Community Finance Unity Trust Bank Charities, Social/Community Enterprises, Co-operatives Charity Bank Commercial banks The Social Enterprise Loan Fund

15. Does your social enterprise meet our criteria? To be eligible for a loan from us your enterprise must be a social enterprise with a charitable purpose. What is a social enterprise?Social enterprises have a primary purpose to pursue a social or environmental goal (as opposed to being purely or mainly profit driven). In addition, they principally reinvest any profit or surplus that is made in the organisation or community to further the social or environmental goal. What is a charitable purpose?The Charity Commission provides detailed guidance on what is a charitable purpose. Please follow this link to the Charity Commission website. We are especially interested in receiving applications from organisations active in the prevention or relief of poverty advancement of education advancement of health or the saving of lives advancement of citizenship or community development advancement of the arts, culture, heritage or science advancement of amateur sport advancement of environmental protection or improvement relief of those in need, by reason of youth, age, ill health, disability, financial hardship or other disadvantage. If the loan you are seeking will help deliver any of the eight things listed above, we would like to hear from you.

16. Roy White NW Regional Director The Social Enterprise Loan Fund Tel: 01829 261019 Mob: 0794 1284299 Web site : www.tself.org.uk The Social Enterprise Loan Fund is a company limited by guarantee registered in England: Company No: 2995859 Registered Office: IBEX HOUSE, Third Floor, 1-5 Wandsworth Road, Vauxhall, London SW8 2LN The Social Enterprise Loan Fund is also a Registered Charity No: 1042514