Financing your business in a tough world<br />Alternatives to the traditional <br />options on the high street<br />Autumn 2009<br />
Traditional routes<br />Overdrafts<br />Loans<br />Asset based lending (HP, factoring)<br />Generally provided by high street banks<br />“Big 4” = 70% + of market in 2007 (Source: Business Banking survey 2007)<br />
Banking options<br />Enterprise Finance Guarantee Scheme<br />Replaced SFLGS, similar guarantee for bank (75%)<br />Wider availability to more businesses but still some restrictions (eg insurance, education) – check<br />Still bank’s decision<br />Extra premium payable<br />Plus some banks now have:<br />new mandates to lend<br />change pricing <br />or convert debt to equity (Capital for Enterprise Fund)<br />
What are the alternatives?<br /><ul><li>Our Top 10 ideas for innovative sources of finance
Various sectors - hopefully at least one which will suit you
Plan ahead – it takes time to arrange finance. Don’t wait until...</li></li></ul><li>Planning<br />How much do you need & when by?<br />Don’t leave it until you’re in your weakest position & be sure you won’t damage your current facilities<br />Have an excellent business plan – both the ‘story’ & the ‘numbers’<br />
Each business’s circumstances are different & these options may not be appropriate for all businesses – please talk to us afterwards for more information & to review your situation in more detail</li></li></ul><li>1a & 1b<br /><ul><li>For all businesses
Watch the terms will suit your business – eg concentration clauses & credit insurance</li></li></ul><li>Number 4<br /><ul><li>Do you sell goods online via Worldpay, Protx or similar?
Do you have to wait 30 days until you are paid?
Merchant finance will provide upfront cash against that balance you are due</li></li></ul><li>Number 5<br /><ul><li>Do you hold stock of finished goods that have a wide resale market? (usually consumer goods)
Stock finance will advance you a facility against the value of that stock
But – only applicable to those businesses who have excellent continuous stock control systems & many resale options</li></li></ul><li>Number 6<br />Financing your payroll<br />56 days advance <br />Doesn’t affect your existing facilities<br />
Number 7<br /><ul><li>Do you have any properties with substantial equity?
Bridging finance is a short-term facility which can be arranged speedily
But quite expensive c.2% per month, hence short-term</li></li></ul><li>Number 8<br />Have you developed a new technology?<br />Could be licensed if it is patented & can earn you income from royalties<br />Skills are in pitching the idea to the right person in the organisation – not ‘techies’<br />
Number 9<br />Corporate Venturing Scheme is used by certain large corporates to gain tax reliefs<br />Invest/JV with a small business<br />Both gain something from the arrangement eg access to specialist skills or resources<br />
Negotiate the deal for deferred consideration – you don’t pay for all the business on ‘day 1’
Many SME disposals are structured this way & this will increase as business sales get more difficult</li></li></ul><li>Conclusion<br />There are many alternatives & others not even mentioned here (eg grants, equity finance)<br />We have the contacts & the skills<br />Plan ahead & talk to us soon<br />
Contact details<br />Kirsty McGregor, Chairman, <br />The Corporate Finance Network<br />For your local firm, visit www.corporatefinance.org.uk/about-us.php<br />