Telephone 01225 580850
Business Support in Bath, Bristol, Wiltshire, Gloucestershire, South Glos and throughout South West England
The obvious source of funds for borrowing are the banks in the form of an overdraft for short term borrowing or a loan for medium or long term borrowing. In the current climate both of these forms of borrowing are less available than they have been in the past. In order to secure this type of funding it is likely you will have been trading for at least three years and have a robust business plan available in order for the lending officer to make a decision in your favour. You may be asked to provide security for the loan in the form of a personal guarantee.
Other sources of loan funds are credit cards and ‘Lenders of last Resort’.
Other forms of loan include Asset Finance; leasing; Invoice Discounting; and Factoring. These, especially the latter two, may require the borrower to have been trading for three years or more.
Online lenders are also available and may offer a service where the borrowing requirement is syndicated to a large number of lenders each covering a small part of the loan.
Borrowing will normally have a fixed cost expressed as a percentage of the loan, or interest and, with the exception of overdrafts and credit cards, is normally repayable over an agreed term.
If you have an immediate requirement for funding we may be able to help. In particular if you have been trading for 6 months or more and have a turnover of £250,000 or more we may be able to sell individual invoices for you. Call us on 01225 580850 for more information.
Grants and Awards
Equity finance may be acquired through personal contact with one or more wealthy individuals or businesses but is most often accessed through a Venture Capital or Business Angel network, either in the traditional ‘Dragons Den’ format or via a crowd funding website.
A robust business plan with a minimum of three years financial projections will be required and a process of Due Diligence by the potential investor will be undertaken between the initial expression of interest and the actual investment.
The funds are transferred to the business in exchange for an equity stake (or shareholding) at an agreed value. The size of the investment and the percentage of the business held by the investor subject to negotiation and the investor (or the lead investor in the case of a consortium investment) is likely to require a seat on the board of directors and be involved in the management of the business.
In order to maximise the likelihood of a successful bid the company looking for funding should obtain HMRC clearance for SEIS or EIS status, which will enable an investor to offset the investment against tax, reducing their risk.
Some Angel networks also have recourse to additional funds which can follow on to top up the investment. It is also possible to use the equity raised to help raise debt funding as the bank may be more inclined to lend when additional cash is in the business or it may be possible to secure mezzanine funding – debt which converts to equity if it is not repaid on time.
Grants may be available from organisations with an interest in promoting specific activity or outcomes to help a business. Typically these will be awarded either directly to a business to encourage them to operate in a particular way or to enable them to operate when otherwise they would not be profitable. Grants may also be paid to businesses to enable them to deliver cheaper, or free, services to particular groups of customer.
Grants falling into the first category include such areas as the arts, DWP grants to the long term unemployed etc. In the second category are, for example, grants to install home insulation, or grants for access to free or low-cost business coaching, Leadership and Management training etc.
If you need help for your business Cool Ventures has coaches registered on a number of government schemes to help businesses grow. If you would like more information on these schemes, please contact us for more information.
A number of web based organisation have recently been launched in order to help businesses raise finance. These sites fall largely into one of three categories. The first enables individuals to invest in a business in return for rewards, the second provides an equity stake similar to the investment process of the Business Angel or VC and finally there is the loan based model where an interest is charged.
In most cases the ‘pitch’ is displayed on the website together with a target for the fund raising; if the target is not reached then the offer lapses and no investments are made. If the target is exceeded then either the total amount promised is taken as the investment, or, particularly in the case of a loan site, the most expensive offers are removed until the full amount required is just covered.
Irrespective of whether you are looking to attract investment into your company to start a high growth business or to facilitate growth, we can help you achieve that goal by preparing you and your company for the best possible bid for funding.
If you are not looking for external funding, but still want to grow your business, we have Coaches accredited for both the Solutions 4 Business High Growth programme and all strands of the Growth Accelerator Programme and have access to supported coaching for qualifying businesses.