Finance in Cornwall 2014 Segment 1

F
Finance in the
Cornwall 2014
As business confidence
returns…
Scott Bentley- Partner

www.francisclark.co.uk
Presenters and other participants
…and more

Structure of morning
• Background and Grants intro (8.30am to 9.35am)
• SME, LEP, Cornwall EU millions and the
‘funding gap’
• Grant schemes (Overview)
• Video from Matthew Hancock (Minister for
Skills and Enterprise)
• Grants, debt, equity and business support –
stratified by size* (9.55 am to 11.00 am)
• Banks, alternative sources of finance and
business support (11.20 am to 12.25pm)
• Q&A one to one / Networking (12.25pm to 1.45pm)

Facts, figures and words – scene setting
• “Bank of England data showed that lending to
companies of all sizes fell in the three months
to February on a year earlier despite calls by
chancellor George Osborne for businesses to
boost growth by investing more.” (Guardian –
22 April 2014)
• Supply or demand? – “What's more, seven
out of 10 applications for business finance
are approved so there's rarely been a better
time to approach your bank.“ Richard
Woolhouse, the BBA's chief economist
(Guardian – 22 April 2014)
• “the finance gap could be between c£84bn
and c£191bn over the next five years”
(Boosting Finance Options for Business,
March 2012).
Bank of England: trends in lending April 2014

How parts of Britain are now poorer than POLAND with families in Wales and Cornwall among Europe's worst off (Mailonline
5 May 2014)

• “Cornish people granted minority
status within UK” (BBC News 24
April 2014)
• Treasury to “take seriously”
Cornwall bid for EU spending
autonomy (WMN 1 May 2014)
• “Cornwall to get €592.9 million in
EU cash between 2014-2020”
(The Packet 29 June 2013)

Business Confidence index… just short of survey high...
(http://www.francisclark.co.uk/news-views/blog/business-confidence-high-on-the-menu-at-breakfast-meeting/)

“Small biz is fire power of UK”
“Small biz is fire power of UK” –
in a tweet from Matthew
Hancock, Minister for Skills and
Enterprise, 6 May 2014

Barriers to growth?
Skills
Infrastructure
Confidence (lack of)
Access to Finance…

Jenny Milligan
Commissioning & Partnership Manager
ERDF Convergence

Finance in Cornwall
2014
Chris Pomfret
Chairman of Cornwall & Isles of Scilly LEP
www.cornwallandislesofscillylep.com

Why?
Kim Conchie, Chief Executive,
Cornwall Chamber of Commerce
Finance in Cornwall 2014
Source: The Telegraph, 24th April 2014

Cornwall Chamber Survey April 2014: The Issues
• Banks give no One-to-One support
• ‘We have to a have a bigger turnover to have a bank manager’
• ‘They’re not interested in lending’
• ‘I don’t want to risk my house as collateral’
• ‘They don’t understand my business’
• They are not sympathetic to my cash flow problems

British Chambers of Commerce Policy Unit 24.4.2014:
The Solutions
• Financial institutions need a 20 year plan to restore relationships,
transparency and trust
• More competition in the business banking sector needed
• In addition, a strong British business bank willing to take risks where
banks cannot in an era of tight regulation and capital requirements
• A retail SME Bond Market, more mezzanine finance and equity all
have a stronger role to play for growth businesses

Grants -
Overview
David Armstrong –
Corporate Finance Director

All change!
• European Programme 2014 - 2020 – c£520m
• City Deal
• Assisted Area
• State Aid
• c500 grant schemes
• BUT - SME funding gap remains!

Our successes
• £12m of grant unlocked £36m of other funding
• Create 840 and safeguard 640 jobs
• What makes a good grant application?

So, what is available?
State Aid + Size Eligibility and level of grant
National
Regional
Local

Regional Growth Fund
• Programmes – Cornwall Marine Network, Assisted Asset
Purchase Scheme, PWGF2 etc
• Projects – direct applications for >£1m
• RGF6 opens Summer 2014
• Competitive process
• Create sustainable private sector jobs
• Roadshows
• ‘Where is our missing £90m?’ – WMN May 5
• http://www.gov.uk/understanding-the-regional-growth-fund

City Deal
Headlines
• £300m (£34m public sector)
• Unlock commercial opportunities in marine sciences,
renewable technologies and to boost exports
• Plymouth and South West Peninsula
• Conversion of South Yard at Devonport Naval Base
• Young People
Business support and grants, including:
• GAIN
• Innovation Vouchers, MAS and UKTI

Cornwall Development Company
• £17.6m of funds
• BIG Vouchers
• Rural Business Investment – grant of <£25k for agri-food
businesses
• Business Innovation Fund – grant of <£50k towards new products
and services
• Other schemes
• http://www.cornwalldevelopmentcompany.co.uk/investment-funds

Keeping up to date
• Website, fact sheets, seminars, blogs:
• http://www.francisclark.co.uk/news-views/blog/coastal-
communities-fund-seconds-away-round-3/
• http://www.francisclark.co.uk/news-views/blog/a-city-deal-of-
300m-cutting-through-the-smoke-and-mirrors/
• http://www.francisclark.co.uk/news-views/blog/bif-bang-
innovation-fund-for-smes-live-in-cornwall/
• http://www.francisclark.co.uk/news-views/blog/why-do-we-
need-grant-advisors/

Investment
ready…
finding the
match
Richard Wadman – Corporate
Finance Director

Matching requirements
Understand
your
requirements
Understand
funding
options and
funders
requirements

The Readiness Process
• When, why and what funding is needed
• Communicating the business proposition -
Business plan and projections
• Viable plan and credible management
• Building the relationship

Investment ready – housekeeping
• Compliance and Legal
 Licences / contracts/ legal title?
 IPR ownership in the company?
 Statutory Accounts/management accounts
 VAT, PAYE/NI, Books and records in order?

Requirements: Grants
• “Project” eligibility – sector, size, location…
• Timescale – prescriptive, process and panels, not
retrospective
• Match funding
• ‘Need for grant’ versus viable proposition
• Other factors - Environment, Equality, on going
requirements

Requirements: Debt
• Serviceability & Headroom
• Security / Personal Guarantees
• Conduits for government initiatives
• Covenants – achievable / appropriate?

Requirements: Equity
• Exit route and returns to the investor
• Investors expertise vs. loss of
independence?
• Be prepared to discuss valuation
• Be aware of FSMA regulations

Investor Ready - Conclusions
• Appropriate funding / understand the funder
• Business Case
• Plan B?
• Know the ‘deal breakers’ – due diligence
• Build in extra time

Grants
Factors contributing to a successful application…
1. Project
2. Eligibility
3. Robust Business Case
4. Business Plan (and Financial Projections)
5. Dialogue with fund holders
6. Understanding their requirements: strategic and operational
7. Need for grant
8. Patience/ Completeness
9. Understanding timelines
10. Match funding – seldom 100% intervention and seldom pay in
advance of defrayal

Break
Session 2 start time
9.55am
Screen 1 (“Early stage”)
Screen 2 (“Developed”)

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Finance in Cornwall 2014 Segment 1

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