No-Nonsense Guide to Finance for High Growth and Innovative ...

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No-Nonsense Guide to Finance for High Growth and Innovative ...

  1. 1. No-Nonsense Guide to Finance for High Growth and Innovative Businesses Business planning • Finding the right adviser • Bank debt Venture capital • Funding innovation and commercialising IP AIM and PLUS • Angel Finance • Invoice and asset-based finance Sale and leaseback • Managing investor relations • Grants and business support
  2. 2. Contents This guide is divided into five parts: 0 introduCtion 1. PrEPArAtion High growth and innovation ����������������� 2 Before you approach anyone for funding, 1 PrEPArAtion you will need to work out where your business is, where you want it to go, and Why do you want finance?�������������������� 4 how much you need to take it there Bring in the experts ��������������������������� 10 Intellectual property��������������������������� 12 2. FundinG oPtionS And ProCESS A look at the various types of finance Calculating what you need����������������� 14 available and how to secure them Attracting equity investment�������������� 16 A business plan to raise finance ������� 18 3. AFtEr thE EvEnt Advice on getting the most out of your 2 FundinG oPtionS And ProCESS relationship with your investors, once you have secured funding Banks and Specialist Lenders ����������� 20 Borrowing against your invoices ������� 24 4. GovErnMEnt rESourCES Making use of your assets ����������������� 26 The schemes available to encourage innovation, best practice and growth Should you buy or lease assets? ������� 28 Angel finance �������������������������������������� 30 5. non-GovErnMEnt rESourCES Venture capital ����������������������������������� 36 Additional sources of funding support from the private sector Should I float my company? �������������� 42 Making the perfect pitch �������������������� 44 For more on all these issues, visit Agreeing the terms of the deal ��������� 46 the Business Link website at: www.businesslink.gov.uk/growth 3 AFtEr thE EvEnt Managing investor relations �������������� 49 4 GovErnMEnt rESourCES Help for growing businesses ������������������� 51 Getting a grant������������������������������������������� 52 Types of grant �������������������������������������������� 53 Other sources of government finance �� 55 5 non-GovErnMEnt rESourCES Additional funding opportunities ������������� 57
  3. 3. Welcome The right finance is key to delivering high growth and backing innovation, but securing it can be a challenge� This online guide has primarily been prepared with small and medium businesses in mind, to help your quest for funds by providing you with a better understanding of: n Assessing your specific funding needs n Where and how to get the right advice n Various funding options n Pitching to and dealing with investors Drawing on the experiences of businesses like yours and advice from industry experts, this guide aims to provide practical business advice� Based on a review of the previous No-Nonsense guide for High Growth Companies, this publication has been created to reflect the economic climate of 2009 and the specific needs of innovative companies� Furthermore, with Business Link, the government-backed business support service, at the helm, there is no product sell or bias – just objective guidance on what’s available in the marketplace� This guide is only a starting point� We hope that, as a result of using it, you feel better positioned to access the support you require� Should you need to talk to someone, our Business Link advisers will be only too pleased to help� To find your local Business Link, call 0845 600 9 006 or visit www.businesslink.gov.uk Finally, if you are a new or early-stage business looking to raise small amounts or start-up funds, you may be interested in our No-Nonsense Guide to Small Business Funding, also available online, on www.businesslink.gov.uk
  4. 4. Introduction Introduction To drive innovation and rapid growth in your business, you need clear, jargon-free advice on securing the necessary financial support W hen you’re looking for funding to take your business to the next level – whether that’s to accommodate image: iStock expansion, or develop a new idea (see the Route to Market box, opposite) – you need sound advice to help you decide on the appropriate source of finance, and how to go must have a service or product that excites about securing it. This regularly updated online people enough to keep them buying from you. guide contains the information you need to Innovation means creating something new start the process, with the key contacts and or delivering a product or service in a way links to enable you to find out more. that has not been done before. Companies that can do this are able to gain a competitive The importance of innovation edge and generate more customer interest. You don’t have to be the most innovative of Such businesses play a key role in companies to achieve rapid growth, but you supporting the UK economy. In March 2008, the Government published the Innovation foundaTIonS for growTh Nation white paper, which set out the need to foster innovation among small The Government took two significant steps and medium-sized enterprises in order to towards creating a climate that fosters raise productivity, encourage competitive innovation and entrepreneurship when businesses, meet the challenges of it commissioned the Gower Review into globalisation and operate within the UK’s intellectual property, which was published environmental and demographic limits. in 2005, and Lord Sainsbury’s report into However, developing an innovative product science and innovation, which came out and service can take a lot of time, during during 2007. The findings of these reports which suppliers and staff have to be paid. have clearly shown that innovation in Funding is an essential part of innovative business is essential to the future success and high-growth businesses, and the of the UK economy. Government is keen for such companies to Today, as we come to terms with the get access to both the money and support economic effects of the global downturn, services they need. the importance of investing in innovation, in preparation for the eventual upturn, now Support for innovative businesses appears all the more necessary. As you can see from the Route to Market box opposite, innovative companies have www.businesslink.gov.uk/growth
  5. 5. Introduction many hurdles to overcome if they are to ThE rouTE To markET: be successful. However, there are many SourCES of fInanCE organisations, some backed by government such as the Regional Development Agencies STagE 1 and Business Link, and others in the private The business begins with just its intellectual property and a growth strategy. However, sector that will support companies seeking as an innovative company, it must persuade funding and investment. the established industry of its worth. A small management team with sector knowledge is Simplifying government support recruited, a business plan written and seed In the past, there were more than 3,000 funding accessed. government-funded business support schemes available to companies, which STagE businesses owners found confusing. To The company uses the funding for make it easier for companies looking for early-stage trials and tests and develops a funding, the Government has introduced prototype. The successful prototype enables Solutions for Business, a streamlined the company to get more funding, and it portfolio of around 30 government-funded aims to get market ready. support products. By March 2010, these are the only products that businesses will STagE With “proof of concept” behind it, the business see. For more information, visit must find a route to market. This may be www.businesslink.gov.uk/solutions through licensing, or directly by the company itself. Discussions with partners, potential understanding the opportunities clients and suppliers are advanced, and the Finding the right funding is about identifying commercial value of the product can now the exact needs of your business at its be assessed. Angel investors or venture particular stage of growth, and tying your capitalists invest in business as they feel the business plan in with an appropriate type company is close to full trading. of investment. Some businesses need more cashflow, especially in today’s tough STagE 4 economic times. Others require a large single As the business begins to grow, it’s likely investment, even if it has to be exchanged in additional investment will be needed to fund return for a share in the business. areas such as manufacturing, sales and Whatever your requirements, you should marketing, branding and additional staff. be aware of your options and what’s available. Further funding would be supported by venture If you have a good business case, there’s capital, but business angels may also co-invest. probably a package that will meet your STagE 5 needs. This guide helps you decide on how The company has begun trading in the much you require, the most appropriate marketplace. However, it could be many type of funding and how to secure it, backed months or years before it achieves an outright by case studies showing how companies profit, and even when profitable it will have to at various stages of development have overcome cash shortfalls. Money from sources accessed finance. It also offers advice such as invoice finance or further equity on what this will mean for your business investment may be considered here. going forward. n www.businesslink.gov.uk/growth
  6. 6. sEctIoN 1 Preparation Why do you want finance? image:iStock If organic growth is proving difficult, raising funds may be the best way to expand your business. Determine your needs and the right route for you I f your business needs a cash injection, Whatever the situation, it’s vital to find the should you go for a debt option – a bank right funding. That means focusing on the loan, asset-based lending or invoice finance options that not only align with your finance – or equity investment, where you aims, but also your stage of development. trade shares for funding? By analysing what stage your business has reached and where Debt and equity you want to take it, the most appropriate way Broadly speaking, you can raise money for to fund growth should become clearer. your business either by incurring debt or If you’re seeking finance, your business selling equity. There are several fundraising has probably reached a critical point. For solutions to consider within these two instance, a start-up technology company camps. Forms of debt go beyond the familiar may need funding to pay wages and rent concepts of borrowing, overdrafts and until its first product comes to market. Or leasing, and include very specific solutions, perhaps, a consumer goods producer on the such as invoice discounting. Whatever verge of securing its first contract to supply a the debt arrangement, you are effectively multiple retailer, might need cash to expand purchasing money, usually by paying interest production and distribution. Alternatively, on credit extended to you, often on the basis a social enterprise may require funds to of being able to provide sufficient security. expand nationally, following local success, For equity finance, investors will want a or, on an operational level, a business may stake in your company based on the sum on need a cushion against cashflow fluctuations. offer, measured against the value of your business. Rather than lending, the backer is IN BRIEF thE RIght FuNDINg buying into your business. They will make a return through dividends and, ultimately, the l Determine what you’ve achieved and sale of shares. Investors tend to structure where the company is now deals with an element of debt, too. This l Ask yourself how appropriate your ensures some payback over the investment sector is for various types of finance period, prior to eventually selling the stake. l Allow a time ‘buffer’ in case Giving up a share of your business can fundraising takes longer than expected be daunting. Fear of losing control, the l Focus on the types of finance expense, the timescale and worries over appropriate to your growth plan complex deals deter some businesses from l Seek specialist advice using equity finance. But equity investors can improve your business’ long-term prospects www.businesslink.gov.uk/growth
  7. 7. sEctIoN 1 by offering key skills and expertise. In fact, casE stuDy the profile of equity investment has risen in After making initial some quarters in line with the lack of liquidity equity investments, the in the debt market, particularly among founders of London- innovative businesses with potentially valuable based Fairtrade hot intellectual property. drinks company Cafédirect managed to secure additional external funding operational issues for growth. This was achived through Businesses often choose debt finance to preference shares and shareholder address an operational problem that may loans, as former non-executive director or may not be growth-related. For instance, Andy Redfern explains. cashflow fluctuations caused by seasonal “A lack of assets meant we couldn’t factors, or late payment by customers are extend our overdraft or credit facilities. frequently smoothed over by an overdraft. Concerned about the commercial nature Alternatively, invoice discounting, where a of venture capital, we decided to raise lender will pay you when an invoice is raised money through a public share issue to (so you don’t need to wait for the customer invest in our brands, develop markets, to pay), may help keep you in the black. If the repay debt, fund working capital and aim is to preserve working capital, leasing improve IT. We raised £5m in this way rather than buying equipment can help, while with sponsorship. Rather than being larger one-off outlays can be met by a loan. listed on a conventional stock market, buyers and sellers are linked up through Funding growth a matched bargain system run by Debt-based solutions may be flexible, but broker Brewer Dolphin.” there will be times when it’s necessary to 12 QuEstIoNs to asK youRsELF 1 What are my business finances like? 8 What factors affect the type of finance I Lenders and investors are more likely can seek? For instance, your company’s to release the funding you are looking growth potential may be too low for a for if your finances are sound. venture capitalist, or your sector may not 2 How much is my business spending and interest investment houses on your list. how much will the growth plan cost? 9 What contingency funds could I access, 3 How much do I need to raise to fulfil my if fundraising takes longer than business objectives? expected or if I fail to secure funding? 4 How much is it feasible to raise from 10 When does the backer need to be paid the various possible sources? back, or when will I need to find an exit? 5 What is the business worth? 11 Will I be able to raise further funds? 6 What will finance cost in fees or equity? 12 Should I be looking for one lump sum, 7 How quickly do I need the money? or staged payments over several years? www.businesslink.gov.uk/growth
  8. 8. sEctIoN 1 IN BRIEF BusINEss INcuBatIoN consider equity finance. In the early 2000s, debt was cheap and many businesses Many early-stage companies improve funded growth with a large amount of help their chances of achieving rapid growth from their banks. by joining a business incubator – or However, in the wake of the sub prime business innovation centre. This provides mortgage crisis, credit may be more an environment where young companies expensive and harder to find, with many can flourish, drawing on resources lenders wary of backing ambitious growth shared with other businesses, such as plans, due to the level of risk. This has premises and management services. emphasised the importance of equity finance. Crucially, a good incubator will Rapid expansion from a turnover of also offer advice on, and access to, £500,000 a year up to £10m, for example, funding by banks, business angels may call for increasing production, opening and venture capitalists specialising in an office overseas or employing a bigger early-stage companies. Some are sales team. You could, of course, fund this privately run and established as by borrowing against assets, but even if businesses in their own rights, while lenders are forthcoming, repayments will others are sponsored, at least in part, be a drain on the business. by public sector agencies or universities. Under these circumstances, equity There are also a number of incubators investment can provide upfront cash without that began life as investors, and over the burden of regular repayments. This time began to add a range of business means reducing your stake in the company, services. Travelling in the opposite as the investor buys in, but if all goes to plan, direction, a number of incubators began the real value of your holding will grow. life as providers of business services, It’s also important to recognise that private adding an investment capability at a later investors can actively help you grow by giving stage. Most incubators have premises, advice and recommending executive and but some offer a virtual service. non-executive directors. Incubator programmes are not open to everyone. Typically, a company will Equity finance have to apply and make a case for being If you choose this route, you’ll be working given access to the facilities. Nor are closely with your investors, so make sure they a permanent option. Designed to that you get to know them first, because it’s accelerate the growth of companies at important that the chemistry is right. an early stage, the expectation is that Ideally, they should have the relevant businesses will move out and establish experience and industry knowledge to help their independence at an appropriate your company grow. time. Statistics suggest that those that Equity finance can come from a number do enter an incubation programme have of sources. These include: so-called friends a better chance of success than those and family investors – essentially personal that initially go it alone. contacts, who have the money and inclination For further information, visit Business to back your plans, with anything from a Link at: www.businesslink.gov.uk few hundred to a few thousand pounds; business angels – individuals who specialise www.businesslink.gov.uk/growth
  9. 9. sEctIoN 1 in supporting young, casE stuDy When Essex-based growing companies; and technology company Lysanda venture capitalists (VCs). developed a system to monitor VCs will probably and control vehicle emissions, the only be interested in owners thought they were onto investments of £250,000 something big. But, as the original or more, and will be co-founder of the business, Simon Harris, recalls, there was looking for a flotation or no certainty that a market existed for the innovative product. trade sale within three to “For evidence of customer interest and how to get to seven years to allow them market, we had to rely on a mixture of anecdote, hunch and to achieve a high return. assertion, as we didn’t have the resources to explore these issues further by carrying out the necessary research. social enterprises “However, we received grant funding from the East of Locating funding options England Development Agency, which enabled us to hire a that match your business consultant to test the commercial potential of the product, objectives is particularly which we called Eco Log. relevant for social “His report identified potential customers and partners. enterprises looking to Thanks to this research, we are now marketing Eco Log.” expand. Often they will find that the conventional Grants of up to £20,000 to assess marketing potential are now sources of growth finance, available from Regional Development Agencies through such as venture capital Grant for Research and Development, a Solutions for or angel investors, are Business product. For further information, visit Business Link inappropriate, requiring at: www.businesslink.gov.uk them to go against their core values. In this situation, a social enterprise should Advisers will also be able to help you consider approaching a specialist lender, or establish whether you really need to look at an alternative public offering, which raise finance or if your problems can be provides funding, while letting the business addressed in other ways. For instance, if maintain its ethical stance. cashflow is an issue, it may be possible to resolve the problem by raising invoices Expert advice more quickly, or by taking a more proactive Whoever you are dealing with, seek approach in chasing unpaid debts. There sound advice. While your accountant will are always alternatives. n undoubtedly help you in your relationship with lenders, dealing with equity investors For advice on calculating your investment requires more specialist help. needs, see pages 14-15 A legal adviser should check any deal, and when preparing to talk to VCs, you should enlist the help of a corporate finance Where to go next specialist. Mid-tier accountancy practices For help with choosing the right finance, visit: with a national presence, are particularly www.businesslink.gov.uk/financetype strong in this area. www.businesslink.gov.uk/growth
  10. 10. sEctIoN 1 Find the right finance solution Finance Amount sought: Typical uses of finance Time Typical charges, fees option required and interest rates £100k to £500k to £1m to arrange £500k £1m plus New premises, rolling out chains, 1-3 months Interest depends on lenders – can be Bank loans 4 w w marketing, working capital, low-end more than 2-4% over base rate charged acquisitions before downturn. Typical fee is 1.5% Primarily a tool to maintain positive 1-4 weeks Service charge 0.1-0.5% of turnover for Invoice cashflow and provide working invoice discounting, 0.75% to 2.5% for finance 4 4 4 capital. Can finance less costly factoring. Daily Interest around 1-4% over growth plans base rate, has increased in downturn Provides working capital and 4-6 weeks Interest of 1.75-2.5% above base rate, Asset-based finance for a variety of reasons plus a lending fee of 0.5-1.5% of the loan lending 4 4 4 including growth plans, refinancing, mergers and acquisitions Can be used to acquire a range of 1 month Deposit of 5-30% and a finance fee assets to avoid paying out large of 1.25-10% above the base rate. Due Leasing 4 4 4 sums upfront, freeing up working diligence charge of 0.25-1% of total capital to fund less costly plans advanced Funding moderate to high-risk, 3-6 months, Legal and accountancy fees up to 5% high-growth plans, including product but could be of funds raised, capped around £10,000 Angel finance 4 w 8 or service launches, marketing and up to 1 year – may be more for larger sums (presently techology development – typically less). Private investors will take equity for post proof of concept cash. Networks charge success fees of 5% Funding moderate to high-risk, 3 months Corporate finance fees of 5%*, plus 5% high-growth plans, including to a year equity options. Legal costs up to £30,000. Venture funding acquisitions, product or Accountancy fees. Around 20% or higher capital 8 w 4 service launches, new premises, equity stake. Membership list no longer national or global expansion freely available Funding moderate to high-risk, 3 to 6 months, 10-12%* of funds raised on average, high-growth plans, including but could including advisers’ fees. Average flotation funding acquisitions, product or take longer cost is £150,000, but can be as much as PLUS market 8 4 4 service launches, new premises, £200,000 national or global expansion Funding moderate to high-risk, 3-6 months, 10.5%* of funds raised on average, high-growth plans, including although including advisers’ fees. Often as much Alternative w funding acquisitions, product or preparation as £300,000 to £400,000 Investment 8 8 Only service launches, new premises, can take Market (AIM) if over national or global expansion far longer £5m Funding moderate to high-risk, 6-12 months 10.5%* of funds raised on average, Alternative high-growth plans, including including advisers’ fees. Often as much public offering 4 4 4 funding acquisitions, product or as £300,000 to £400,000 (APO) service launches, new premises, national or global expansion www.businesslink.gov.uk/growth
  11. 11. sEctIoN 1 4 Likely w Possible 8 Unlikely Pros Cons Social enterprises’ chances of Page securing funding no. Loans provide a means to finance Repayments can drain cashflow; you may 20-23 growth without surrendering equity to need to put up security; costs have risen; may 4 a shareholder be harder to secure and rates may be higher Depending on the lender’s terms A trading record and £100,000 plus turnover 24-25 and conditions, you can receive up may be needed, excluding smaller companies to 90% of the value of an invoice as and start-ups. Factoring involves the lender 4 soon as it is raised, providing capital chasing debts, which can unsettle customers Loans can be secured against a The minimum sum may be too high for some 26-27 wide range of items, plus intellectual small businesses. The lender effectively property. Currently, banks may be more takes ownership of the assets, which are sold 4 willing to lend on an asset-backed basis if the debt cannot be serviced Very flexible, as almost anything can You will not own your assets 28-29 be leased; gives access to up-to-date equipment; offers tax benefits, as 4 leasing costs are an allowable expense Angels tend to be more prepared to Angels can be hard to find; they will seek an 30-35 back early-stage businesses; may offer exit, typically after three to five years, or sale contacts, advice and skills; less formal on AIM/initial public offering; you will have to 4 Although angels will have than venture capitalists surrender equity dependent on the valuation exit concerns of the company Venture capitalists provide larger Venture capitalists expect rights over your 36-41 amounts than angels; offer expertise business; will seek an exit in three to five w Finding an exit strategy that gives investors a good return and keeps and access to top-class management; years, meaning a sale, float or refinancing; the core values of enterprise can add will usually have strong industry contacts will want a good deal on equity; will push hard complexity to venture capital deals on valuations in current financial climate Cheaper than floating on AIM or the Success depends on market sentiment and 42-43 London Stock Exchange main list, convincing investors about your company; w Investors may be wary of backing social ventures in the current climate, but offers similar advantages, notably only a limited pool of investors and liquidity unless there is a clear prospect of tradable shares that can be used to (the buying and selling of shares) is restricted; a return make acquisitions; profile and credibility; communicating with shareholders takes time less regulation than other markets and effort; you will have to surrender equity Profile and credibility; typically raises Many companies find there is little liquidity 42-43 larger amounts than debt, angels (the buying and selling of shares) in their w Investors may be wary of backing social ventures in the current climate, or PLUS; you can raise more money shares; reporting to shareholders takes time unless there is a clear prospect of through secondary issues; tradeable and effort; you give up equity; better suited to a return shares can be used to fund acquisitions medium-sized businesses; tough raising new money in current financial climate Profile and credibility; offers more Not appropriate to all business types; 42-43 funds than debt and angels, but is still you have to create publicity and make 4 Allows social enterprises to raise funds, but doesn’t open up the appropriate for small businesses; less the market yourself business to the full market pressures regulated than official markets * Typical amount – fees are negotiable www.businesslink.gov.uk/growth
  12. 12. sECtIoN 1 Preparation Bring in the experts image: Shutterstock The right advice is essential when raising funds. But where can you go for help? S ecuring finance will be easier with CasE study key advisers on board, who will help CCBT began to the deal run more smoothly, and spot develop an innovative any funding barriers. For example, they will computer-based know if your business is going in the wrong treatment for anxiety direction, or if your management team is disorders, but needed investment along weak. They will also help identify alternative with an experienced management team funding sources and have useful contacts. to realise its commercial potential, Gaining funding will take you away from explains finance director Tim O’Connell. your day-to-day role in the business, with “We used the investment-readiness larger equity finance taking up to six months scheme run by Warwick Science Park’s to complete. Professional advisers will guide Investment Fund to commericialise the you through this complex process, and the business plan, bring in an experienced long-term benefits far outweigh their cost. team and secure funding. Our product, FearFighter, is now being used by one Finding the right advisers third of the UK’s primary care trusts, Start with your local Business Link adviser, and we’re planning to expand overseas.” who will assess your needs, and suggest at least three options for each position sought. Also, ask friends and business contacts for needs and examine their track record. You’re recommendations, such as your accountant looking for advisers who can not only help you and bank manager, or go to professional gain finance, but who also understand your bodies, like the Law Society. business. So you need to find out: Select experts who are right for you. Make a n What information and advice you will get shortlist, then meet to discuss your business n How often you will meet and for how long n If you will be able to call them in a crisis n What areas they will cover IN BRIEF ExpERts n What you will need to do yourself l Businesses that seek expert help build n What results you can expect turnover faster than those that don’t n How they will charge you l Accountants and lawyers are essential Be clear about how much effort you are for raising finance. For equity finance prepared to put into the relationship. To and going public, you may also need a make the most of your meetings, ensure you corporate finance adviser, a broker and have all the key details to hand. You’ll also a financial PR consultancy need to be prepared to act on their advice. l Build advisers’ costs into funds sought Once you have selected your team of experts, agree specific targets. Be honest 10 www.businesslink.gov.uk/growth
  13. 13. sECtIoN 1 FuRthER poINts to thINk aBout What to ask before you hire an adviser: you should also: n What types of fundraising does the n Speak to one of the expert’s recent expert specialise in? Check their track clients to find out how they operate and record in your business sector what they did for them n Which lenders and investors do they n Think carefully about the fee structure, work with? Are they impartial? so that it provides the right motivation n How quickly can they secure you finance? to allow you to get the most out of your n How do they propose structuring fees? relationship. One possible option would n Can they supply three references, ideally be to combine a retainer, a bonus for in a similar business area? getting better terms and a closing fee and communicative. Let them know if you and broker to help you comply with the are unhappy with anything, and check they regulations. A PLUS market listing requires a feel you have stuck to your side of the deal. corporate adviser. Expect to pay £100,000 to £400,000, plus 3-4 per cent of funds raised. Who should you consider? Accountant: One of the first outside sources Financial PR adviser: Compulsory for a to consult, accountancy charges will depend market listing, financial PRs charge from on how much you raise (typically 1 per cent £2,000 to £5,000 a month. or more of larger sums) and the scope of the work. Otherwise expect an hourly rate of £200 High growth coaching: Coaches offer key to £400, or £175 to £300 outside London. advice on how to grow your businesses. Coaching for High Growth, a Solutions for Legal adviser: You can’t raise equity finance Business product, delivered by Regional without a legal adviser. Fees for raising Development Agencies and accessed £500,000 in venture capital would typically through Business Link, assigns coaches with range from £15,000 to £40,000, while a experience at chief executive level. They work flotation will cost from £50,000 to £150,000. with companies with high growth potential to foster and develop management skills. Corporate finance adviser: Sitting between Companies wishing to take part must make your business and potential lenders or a case for inclusion. For more information, investors, corporate finance advisers help to visit: www.businesslink.gov.uk/solutions n source and secure all types of finance at a higher level. Charges are usually made up For advice on calculating your investment of a series of fixed costs, a closing fee and needs, see pages 14-15 bonus. Fees may reach 7 per cent for deals under £1m, but 2-6 per cent for larger deals. Where to go next NOMADs, brokers and corporate advisers: For more on advisers go to To list on the Alternative Investment Market www.businesslink.co.uk/advisers (AIM), you’ll need a nominated adviser (NOMAD) 11 www.businesslink.gov.uk/growth
  14. 14. sEctIoN 1 Preparation Intellectual property Protect your intellectual property image: Shutterstock and other intangible assets, as they may be important when you are looking for investment I f your business is innovative or creative, successful, you can license your IP to other you will probably have developed some businesses or to manufacturers abroad. intellectual property (IP). The law allows you to protect the originality of What intangible assets can be protected? your business, and you should take all Usually for IP, only the three “registered the steps possible to ensure others can’t rights” in UK Law are considered: patents, steal your ideas. IP can also be a major trade marks and design rights. They protect advantage when searching for finance, as the innovative processes, the name and the investors are looking for a concept that can’t design of your product or service. be copied easily. In fact, if you have not taken But you also have unregistered assets, the necessary steps to safeguard your IP, like copyright, know-how and confidentiality. few investors will want to risk their money by These can be protected using contracts with investing in your business. staff, manufacturers and distributors. It is Currently, businesses built on innovation vital to be thorough in protecting your IP, and and creativity have an advantage when investors will ask what steps you have taken. looking for funding. They can be cheaper If you employ a company to improve your to set up and expand, and your competition prototype, have a clear contract that ensures has a harder job copying your good ideas. you own the rights to any improvements. If Often profit margins are higher than for your product is a spin-off from education, or labour-intensive businesses, and if you are uses ideas from your previous job, you’ll need to be clear about the ownership of all IP. IN BRIEF pRotEctINg youR Ip Where do I start? l IP is not just a patent. Most original Consider your IP from day one, and secure ideas can be protected in some way your rights as soon as possible. If you’re l Protect your IP before looking for unsure about the rights you own, audit funding, or you may put off investors and them and take the necessary steps before risk your idea being stolen applying for funding. Use The Intellectual l Be careful when using contractors. Property Office’s (IPO’s) IP Healthcheck to Make sure they assign the IP from their print a report showing what action needs to work to you and insist on non-disclosure be taken. Visit www.ipo.gov.uk for this and other useful IP information, including a list of 12 www.businesslink.gov.uk/growth
  15. 15. sEctIoN 1 relevant events. For further information from casE study Business Link on how you can make the Unable to secure most of your intangible assets, visit funding for his www.businesslink.gov.uk laptop security If you need an IP specialist lawyer, most products business, will offer a free introductory meeting to Norman Shaw of discuss your needs. The Chartered Institute ExactTrak, based in of Patent Attorneys (www.cipa.org.uk) and Oxford, met two intellectual property the Institute of Trade Mark Attorneys (www. (IP) lawyers from Mathys Squire, who itma.org.uk) can recommend one near you. explained that his problem was that he didn’t hold patents on his invention. What are the costs? “I was having a problem getting A basic UK patent costs around £3,000 to investors to take me seriously. £4,000, but global patents are far more “Mathys Squire worked with me expensive. Registered rights are charged to identify the innovative and unique for a period of time in a certain area. For steps that were the basis of three example, registering a trade mark for patent applications. 10 years costs £200. You need to protect “With my IP protected, three venture your product wherever it is sold or made, capitalists offered funding for the next especially in emerging economies, where it’s stage of development, and the first cheaper to copy ideas. You’ll also need to pay big orders are already coming in. My for expert advice if your concept is similar to prototype also received government others on the market. You may not be able to funding, and none of this would have protect registered rights that are similar to happened without patent protection.” your rival’s IP, but can, for example, ensure the confidentiality of your know-how is safe. some Regional Development Agencies. The What questions might investors ask? grant help that’s available to businesses Aim to show you’re protected in two ways. varies widely. For more information about First, prove your business can’t be copied grants, see pages 52-56. easily. The harder it is for rivals to enter If you are collaborating with a commercial your market, the more attractive your partner to produce a prototype, draft proposal. Second, show that your idea has agreements to protect your IP are available licensing potential. You can use your IP as a at www.ipo.gov.uk/research-ukip.htm n source of profit, either making it available, or using contractors to manufacture your For advice on attracting equity investment, product for other markets. To do this, see pages 16-17 consider exactly what you need to protect in different markets, and include this in your business plan. Where to go next Visit www.ipo.gov.uk for guides, education pre-commercialisation funding? and the free downloadable IP healthcheck If you have a bright idea, but need some help for your business to commercialise it, funding is available from 13 www.businesslink.gov.uk/growth
  16. 16. SECtION 1 Preparation Calculating what you need image: iStock Before seeking finance, it’s important to know how much you require, your chances of securing it and which source best suits your needs F inancial backers expect you to have areas you may need to assess include: salary carefully considered your funding costs for staff you plan to recruit, the cost requirements, so that the amount and of the equipment required, or how much timing of borrowings has been rigorously suppliers would charge for the new stock lines assessed and there is a robust strategy in you propose to sell. place to provide repayment – essentially, that Rob Donaldson, head of MA and private your business is investment-ready. equity at advisory firm Baker Tilly, advises asking for slightly more than you need How much should I ask for? when raising finance. “The fixed costs can You need to cost each aspect of your growth be high if you are looking to secure smaller strategy. For acquisitions, try to identify amounts of money,” he says. “So make the potential target and its likely price. To sure you raise enough, as you don’t want launch a product or service, you’ll need to do it twice.” a marketing plan, which should include: You should also plan to include some who you will target; assumptions about breathing space for at least a year, as it’s how many sales or customers you hope to difficult to ask for more once a sum has acquire; the proposed medium; and the cost been agreed, and extra funding could of the campaign. Opening or purchasing new take several months to raise, potentially premises will require an assessment of the compromising operations. cost to buy or rent in the suggested location, “Company directors tend to take as well as any proposed modifications. Other an optimistic view of prospects,” says accountant Stephen Bayfield of PKF. IN BRIEF YOUR FUNDING NEEDS “Investors gain confidence if a contingency plan is evident, as things rarely go to l Research what level of funding your plan. Remember, sales are usually more plans require, the risks versus your unpredictable than costs.” expected returns, and how the funds Ultimately, you may need to temper your will be repaid ambition. It’s worth formulating alternative l Consider what affects your growth plans in case the financier offers you calculations, such as sector factors, a smaller amount than you have asked for, to track record, business strategy, the life make sure you don’t lose time trying to raise stage of your company, existing financial funds while your existing resources dwindle. resources and the value of your assets If your sector is unusual, new, or you’re a social enterprise, the time taken to raise 14 www.businesslink.gov.uk/growth
  17. 17. SECtION 1 growth capital will be further extended, CaSE StUDY and this should be built into your costs. Seatwave is a £30m You may also need to consult specialist London-based lenders (see Banks and Specialist ticketing company Lenders, pages 20-23). which has gained backing from What affects the amount I can seek? venture capitalists Be realistic, given the stage of development on three separate occasions. Chief your business has reached. For most finance operator Aksel van der Wal companies, funding tends to rise explains what you need to consider incrementally from small amounts of when looking for finance. secured debt and personal investment, to “Business owners need to think about more sophisticated facilities, such as invoice not only what they want to achieve, but finance and leasing, and business angel, also how much of this is realistic. Once venture capital and public market funding. this has been done they can look at how When considering how much you can expect much it will cost. Our growth was mostly to secure, think about these two factors: viewed in terms of hiring new staff and marketing. Because of the way our How financial institutions view your sector payment model works, we don’t have n Your management team’s track record huge cashflow issues. However, ticketing n Existing and potential future competitors, is seasonal so that had to be taken into and the economic climate account when making forecasts.” n Your existing debt facilities n Your asset backing – what assets can you use as security with investors or lenders? about angel and venture capital finance, n Your vision – it’s important to have clearly go to pages 30-41. defined goals and ambitions For a listing on the Alternative Investment Market, most companies look to raise at least What is the most cost-effective option? £5m, with the PLUS market typically used to Raising finance can be expensive in terms of generate slightly less. Listing costs may top time, and arrangement and advisory fees. For £500,000 on AIM (less on PLUS), so consider more on advisers’ fees, go to pages 10-11. carefully whether either market can meet your If you are raising venture capital, you need needs. The financial climate has seriously hit to be aware of the costs involved. So if you’re the stock markets, so flotation may not be the likely to need extra finance in the medium right move until the economy improves. n term, it’s often more economical to seek more at the outset. For advice on using bank debt for growth, As most debt is secured, costs tend to be see pages 20-23 lower, although for cashflow loans a funder will require independent due diligence, which will be paid for by the borrower. Where to go next Cash outlay for angel investment tends to For The Institute of Chartered Accountants be minimal, but risk is usually compensated in England Wales, visit: www.icaew.com for by a higher equity stake. For information 15 www.businesslink.gov.uk/growth
  18. 18. SECTIoN 1 Preparation Attracting equity investment It’s a battle securing investment from venture capitalists and business angels, so it’s vital to make your proposal as attractive as possible U nder any circumstances, encouraging trading environment, as well as explaining investors to trade finance for a how you are going to take advantage when stake in your business is tough, and the recession subsides. currently it’s harder than ever. Ian Shields is a manager at g2i, which Only a fraction of the proposals venture helps businesses prepare for funding. capitalists (VCs) receive get as much as a He says investors will be impressed by a phone call. Even fewer will go all the way and business plan that understands the effect secure investment. the recession is having on companies. Today, risk is seen even more vividly, the “Identify how you’re going to get through flotation market is effectively closed, and the downturn and take advantage when you investors have less to invest – there are come out the other end,” he explains. simply fewer deals around. To stand It’s also important to know what the a decent chance of success, you need a investor is looking for from a company, so strong proposition, able management and assess the following: rigorous preparation. n The backer’s investment range n The stage of business they typically finance Getting investors’ interest n Their geographical reach Your proposition must show a carefully n Their deal portfolio and sector preferences evaluated business idea detailing the risks If you’re seeking angel finance, go to and rewards. Emphasise how potential networking events to get an idea of who investors will benefit financially and the you’re up against. For more on business timing of their exit, if applicable. You should angels, see pages 30-35. also include where your business sits in its chosen market and why it will succeed Your management team against existing and potential competition. Investors need to be able to believe in and It’s also very important to show an investor work with your management team. They how your business will cope in a tougher are likely to be looking for: Personal qualities: Illustrate IN BRIEF SECURING EQUITY INVESTMENT your business pedigree by highlighting past successes l Match your proposition to investors’ requirements Contacts: Prove you have good l Investors consider track record, the quality of the contacts in your chosen sector management team, contacts and financial commitment Commitment: Show that l Work out what returns you can offer you believe in your business l Decide how much equity and control of your business enough to invest some of you would be prepared to share your own money in it, and that you’re prepared to put in 16 www.businesslink.gov.uk/growth
  19. 19. SECTIoN 1 CASE STUdY Richard Williams is chief executive of Hampshire bio- detection company image: iStock Stratophase, which has attracted £3.6m of finance from investors, including maximum effort. Social enterprises may Boston-based East Hill Management. find it difficult to secure investment that “You’ve got to pitch your business requires security, as directors are unlikely plan according to what your investor to want to offer personal guarantees. is looking for,” he says. “We are Therefore, social enterprises should explore developing devices that can detect fatal all alternative security sources before viruses without the need of a laboratory. approaching an investor They could be useful in medical Team: Emphasise your directors’ previous settings, but because of the nature of experience in their role and at a similar level that industry, they could take years Track record: Push your past experience. If to produce, which could have put off you’ve been through tough times, it’s vital to potential investors. explain the lessons you’ve learned “To avoid this, we adopted a low-risk model, using the technology to develop The returns you can offer products for military, agricultural and An investor’s main concern is the potential manufacturing environments before return and when they’ll see it. They typically moving into the medical sphere.” seek businesses offering an early exit, by trade sale or flotation (for more on exit strategies, see pages 36-41), and will Also, treat rejection as a chance to want to know: improve your offering. Ask for feedback and n Is the proposition feasible? try to fill gaps in your proposal. n Can the management deliver the plan? The ability of VCs to raise funds has been n Are the potential rewards enough? adversely affected by the ecomomic downturn, n How will I get my money out? and this has resulted in many investors having n If the business is to be sold who will buy it less money to re-invest in businesses. n or how will the market react to flotation? For advice on what to include in your What are best and worst-case returns? business plan, see pages 18-19 By attracting equity investment you are growing your business, and although you will have a smaller stake, it will potentially be Where to go next worth significantly more. For more on equity finance, visit: Remember that equity investors in social www.businesslink.gov.uk/equity enterprises will not necessarily be looking Visit the British Venture Capital Association at a conventional exit strategy, but may still at: www.bvca.co.uk want a return on their investment. 17 www.businesslink.gov.uk/growth
  20. 20. SEcTIoN 1 Preparation A business plan to raise finance Securing funding isn’t easy during a recession, so getting your image: iStock business plan spot on is essential if you are to convince investors T o acquire the funds you need to grow, and growth strategy; unique selling points your business plan should be tailored (USPs); sales; forecasts to your finance provider. A potential History and background: The business; its backer wants to see why you need finance, origins; historical performance; sales data how you plan to use it, how they will get The market: Size; growth rate; major their money back or realise a return on their players; your position; technical advances; investment, and the evidence that backs up forecasts; relevant government regulations any claims you are making. Opportunities: Vision and objectives; If you have an inexperienced management customers and their needs; target market; team, which has never dealt with raising product or service positioning and value finance before, you should consult an offering; USPs (such as plans to cut prices); adviser, who can help you prepare the patents or other legal protection; pricing; right business plan. distribution channels; marketing plans Operations: Financial; organisational and The structure of your plan human resources; requirements not yet met Executive summary: Your overall vision; Management team: Brief background of your a mission statement; plans; the current key people; their responsibilities and relevant state of the business; details on your skills; gaps that need to be filled product or service; your value, proposition SWOT analysis: Strengths; weaknesses; opportunities; threats. Be thorough here, to avoid investors spotting weaknesses and IN BRIEF BUSINESS PLANS threats that you have not identified l Include background information on Financial forecasts: Sales; gross margin; the business, market analysis, future logic behind figures; profit and loss account; opportunities, existing operations, balance sheet and cashflow three-year brief management biographies, SWOT forecasts; payback period; breakeven point analysis, forecasts and existing finances Financing: Loans and debt arrangements; a l Try to keep it under 40 pages and breakdown of how funds will be used tailor it to the type of finance sought – 10 Exit routes: Possible exit strategies – for pages may be enough to secure debt more on this, see the box on page 41 l Keep the look and feel straightforward This covers most forms of fundraising, although securing debt requires less detail, 18 www.businesslink.gov.uk/growth
  21. 21. SEcTIoN 1 with added emphasis on assets, security, n For equity investors, focus on market creditworthiness and aged-debtor analysis opportunities and exit options, such as – who owes you what and from when. trade buyers. Venture capitalists are A business plan for a social enterprise having a tough time, as currently the will also need a clear explanation of what market for flotations is effectively shut, the social enterprise is and your social while investors are more cautious. This objectives. It should show that the company makes floating unlikely, but if you’re not has a strong track record, is able to repay exiting for three years, it can be discussed any borrowing, and, if relevant, generate sufficient profit to interest a social investor. Focus on the present To read and download a sample plan, visit While projections are vital to backers, www.businesslink.gov.uk/businessplan don’t forget existing sales, customers and the make-up of your management team. How much to include “People buy people, not business plans,” says Each section should be between two and four Khedair. “Business ideas remain conjecture pages, with slight variations depending on the without the right people to implement them.” type of business – a manufacturing company, for example, might talk more about its Keep a straightforward look and tone products’ intricacies. Avoid over-emphasising Lengthy plans are off-putting, says Khedair. any one section, and only use headline “An executive summary should be just figures in the executive summary. that – a summarised version of the main “Knowing what to leave out is as important areas of the plan,” she stresses. “Restrict as knowing what to include,” says Jane it to two sides, letting the rest of the plan Khedair, managing director of Business provide the detail.” Plan Services. “An effective business plan Presentation is everything. Keep the is more than just a set of spreadsheets, but plan’s language and appearance clear and the narrative shouldn’t be a novel. It needs to accessible. Use photos and graphics if have sufficient detail to present the relevant relevant, but don’t overcrowd it. Supply the facts and whet readers’ appetites.” plan as a professionally presented document. Seek advice, but an adviser shouldn’t Empathise with your audience write the plan without your input. It should n Backers want to be confident that the reflect your character, because investors are interest and capital repayments can be backing you as much as your idea. n met. Talk about how risk can be controlled, loss can be limited, and security. Adjust For advice on negotiating with investors, the tone to suit the audience see pages 46-48 n Invoice and asset-based financiers are less concerned with security than the quality of your debtor book, credit management Where to go next capabilities, bad debt record and the extent For more on business plans in general, visit: to which the business suffers credit notes. www.businesslink.gov.uk/planforgrowth They may also want to have an idea of the For more on business plans tailored to sell-on value of your assets. For more on equity investors, visit www.bvca.co.uk asset-based lending, go to pages 26-27 19 www.businesslink.gov.uk/growth
  22. 22. SECTION 2 Funding options and process Banks and specialist lenders The credit crunch has made it difficult to secure funding from lenders, but there is still money out there. So how can you raise it and is it right for your business? G etting a loan from a lender may be aware of the EIB’s lending packages, as it a little tougher than usual at the may help you get a cheaper loan. For more moment, but despite all the furore details on these, visit: www.eib.org surrounding the credit crunch, cash is still available for businesses and entrepreneurs. Enterprise Finance Guarantee In response to the serious problems Are the banks still lending? caused by the credit crunch and demand Banks are still providing finance, but it may from small businesses, the Government be more difficult to secure than before. The has intervened with a scheme to interest rates banks are charging are likely encourage bank lending to businesses. to be higher, because they are assessing The Government had previously supported risk in light of the economic situation. At a bank finance for businesses through the time when many well-known businesses Small Firms Loan Guarantee (SFLG). have suffered, successful growing and viable This has currently been replaced with the companies are finding it hard to get funding. Enterprise Finance Guarantee (EFG), A key problem is that banks aren’t lending a Solutions for Business product. to each other as much as before, leading Under EFG the Government will to a slowdown in credit for everyone. As guarantee lending to viable businesses. a result, banks need to borrow money The scheme means the Government is from institutions they may not have used providing £1bn of guarantees for £1.3bn previously, such as the European Investment of lending to small businesses. There are Bank (EIB). The EIB doesn’t lend directly several lenders on board, offering loans to small businesses, but lends through of between £1,000 and £1m for a period of local banks. Several UK banks already take three months to 10 years. Visit www.berr. EIB loans to support their small business gov.uk for a list of the lenders involved. To clients. So if you are applying for a bank qualify, you must be a UK business with a loan, make sure your bank manager is turnover of up to £25m, and have no obvious access to finance. The guarantee can be IN BRIEF KEY ASPECTS OF BANK dEBT used to support new loans, l Good for buying assets and medium-paced expansion refinance current ones, or l Raising between £1,000 and £1m plus is possible convert part or all of an l Assets and track record of the management are key existing overdraft into a l You may have to make personal guarantees, such as loan to release capacity in putting your house up as security order to meet working l It has become tougher to secure since the credit crunch capital requirements. Under current government plans, 20 www.businesslink.gov.uk/growth
  23. 23. SECTION 2 BANK dEBT PROS n It is cheaper and easier to obtain than equity finance n You do not have to give up any control of your business to a backer CONS n Businesses with little trading history may find larger loans hard to obtain n Defaulting on repayments or breaching conditions may mean paying back in full sufficient cashflow to service the loan may not be considered. However, your bank may offer a capital interest holiday (or repayment holiday) from the start or allow you to make lump sum repayments. image: iStock Regardless of the exact nature of the deal, the bank will want to know the following the scheme will be available up to 31 details about your business before they will March 2010. be willing to lend: For more information on the EFG, n The track record and financial position of together with other ways the Government your business and the management team is helping small businesses, visit: n The loan’s purpose and your ability to repay www.businesslink.gov.uk/realhelp n The value of your personal guarantees Banks generally ask for security on the Should I get a loan? loan in the form of a personal guarantee. If If your business needs a significant injection you don’t have the necessary funds, banks of cash, you may have no choice other will usually ask for your home as security. than applying for a loan. The only real alternative is to sell shares in your business. What are the costs? However, you must be aware that equity is Bank loans are cheaper to raise than often the most expensive form of funding equity, but pose more of a cashflow in the long term, since you are exchanging burden. Always check the annual percentage part of your business in return for cash. rate (APR) for interest on any loan. It is Also, as a result of the credit crunch, your worth shopping around. Get a written company is likely to receive a lower valuation quotation first, and read the small print, than previously. looking for hidden charges. In general, If you do take a loan, you will have costs include: repayments scheduled from the outset. n Interest, which is usually 2.75-4 per cent This means new businesses looking over the base rate, although it may be to launch products or services without higher for new businesses and deals can 21 www.businesslink.gov.uk/growth
  24. 24. SECTION 2 CASE STudY What is the loan dependent on? Hi Ho Silver, based Banks have a strict underwriting process in Somerset, is a and set the following provisos before a loan multi-million pound can be agreed: jewellery business n You have to sign legally binding covenants, which has been and if you breach the conditions, the financed solely through overdraft loans. bank will be entitled to immediate full However, until director Emma Warren repayment joined the business, it had only been n Your profits should demonstrate an ability able to get limited finance from the to service the debt bank, and so its ability for growth was n Monthly management accounts and being inhibited. audited annual accounts are required to be To change this, Warren set about presented before and possibly throughout improving the quality of information the the period of the loan business produced. This took the form n Lenders may want to see how you of formal management accounts that manage debt, with analysis of how much could show a lender exactly what the the business is owed alongside when money it was investing in the business the invoice was issued (this is called was going to achieve. aged-debtor analysis) “Part of my brief was to get management accounts in order and Getting the best deal to establish a relationship with the Take the time to shop around – it could save bank. This makes a huge difference. you money in the long term. Make sure you If your bank has proper management negotiate with the bank manager to get the information which is presented monthly, best deal, and ask if you can have any special and you inform them about the decisions terms in writing. that you are making, then it makes it a Use a financial broker to propose the lot easier for them to support you.” best deals for the type of finance that your business needs. A broker can save you time vary. Interest is charged on the amount and money, and can also increase your of the facility you use at one time, and is chances of getting a loan by presenting levied quarterly or monthly your proposal in the best way to the most n A lending fee with arrangement costs of appropriate lenders. But don’t forget to 1-1.5 per cent of the loan can be charged establish what fees, if any, the broker n A prepayment fee may be levied if you will charge you. decide to pay the loan back early You will be able to find a list of financial n Charges are based on the level of risk and brokers by visiting the National Association your standing of Commercial Financial Brokers’ website at www.nacfb.org. How quickly can a loan be secured? Research the small print. Apart from It can take between one and three months to interest rates, assess other lending finalise the detail, but you should get an initial criteria, such as loan terms and set-up answer within weeks. Getting quotes from a fees. Consider having an expert, such as a few banks can force a quicker decision. solicitor, review the loan documents. 22 www.businesslink.gov.uk/growth
  25. 25. SECTION 2 Negotiating the terms AlTERNATIvE SPECIAlIST lENdERS of your loan A loan agreement can be a Not all businesses fit into the same type of model, and as long and complex document. a result, have difficulty getting finance from traditional How you agree the terms of lenders. If your business has a social, charitable or ethical the loan will have a direct dimension, then you could try the sources below: impact on the health of your Name Website business. Remember that almost everything will be up Adventure Capital Fund www.adventurecapitalfund.org.uk for negotiation. Aside from discussing basic Big Issue Invest www.biginvest.co.uk issues, such as the due date of the loan and the interest rate, Charity Bank www.charitybank.org you also need to establish the amount of the loan fees. It’s Futurebuilders England www.futurebuilders-england.org.uk important to make sure that Triodos Bank www.triodos.co.uk you will have the flexibility to pay off your loan earlier than Unity Trust Bank www.unity.co.uk the due date and, if possible, try to avoid any penalty for Co-operative early settlement. Community Finance www.icof.co.uk Negotiate for a grace period for your payment schedule and check to make sure that late payment However, specialist lenders can be charges are practicable. more flexible in the way that they look at other aspects of the business, particularly The alternatives to the high-street banks personal guarantees. Big institutions typically use a computer “We work with the usual types of security to give loan decisions, and if your sector is (property, etc), but don’t take personal unusual or you run a social enterprise then guarantees,” says Cooper. “We can work with it may not fit the model. security from a community of guarantors, Briefing the bank on your market can help, where risk is split between them.” n but if you are rejected there are alternative lenders that specialise in particular sectors, For advice on calculating your investment as well as in helping businesses that have needs, see pages 14-15 failed to get funding elsewhere. While specialist lenders often operate in areas that the main ones won’t consider, Where to go next they still examine the same criteria. For more details on bank debt visit: “We look at a number of factors, including www.businesslink.gov.uk/bankdebt business background and history, and For more information on the banking sector what experience the management team in general, go to The British Bankers’ has,” explains Sue Cooper, deputy head of Association’s website: www.bba.org.uk business banking at Triodos Bank. 23 www.businesslink.gov.uk/growth

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