Slides from our Finance in Cornwall follow up event - 'How to apply for loan finance'.

1. How to apply for loan
funding
(bank and non-bank)
1 July 2014
FiC2014 follow up briefings. No 1

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House keeping

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Contents: Presenters and format
• Presentations (8.15am to 9am)
• Intro: Richard Wadman (5)
• Bank: Bruce Pedrick (12.5) (Lloyds)
• Non-bank: John Peters (12.5) (SWIG)
• Business Plan and “Alternative Finance”:
Richard Wadman (7.5)
• SME: Ben Treleaven (7.5) (ISO Spaces)
• Questions/discussion over breakfast (9am to
10am?)
1. What they look
for
2. Key
documents:
specific
comments
3. Why
applications
succeed or
fail?
4. Advice/ “Tips”

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Investment ready: preparation
Understand
your
requirements
(A)
Understand
funding
options
available (B)
and funders
requirements
(C)
Type of
funds
required

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Your requirements (A)
Cash: amount and term?
Other e.g., expertise or contacts?
Business Finance Guide:
• Step out from your business
• Take a fresh look at prospects and challenges
• Analyse your opportunities
• Reach for the future (projections)
• Think about finance

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Funding options (B)
FiC 2014 and Finance in Cornwall factsheet: Grant, Debt and
Equity
And many more…

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Know your options (C – part)
The Business Finance Guide
• Overview: through company lifecycle
• Equity
• Debt

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The banks…
• “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)
• “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

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The banks
Banks… still the major source of funds to SMEs
During the 1st Quarter 2014:
• The banks approved £5.5bn of new loan facilities and £1.3bn of new overdraft
facilities. Of this, £2.6bn of new loan and overdraft facilities were for smaller
businesses and £4.2bn were for medium businesses, an increase of 10%
compared with Q1 2013.
• March 2014 also saw the highest monthly level of approved borrowing since
November 2011.
https://www.bba.org.uk/wp-content/uploads/2014/05/BBA01-431558-v1-Bank_Support_For_SME_s_-_Q1_2014.pdf
Approval rates were:
• Smaller businesses – Loans
79%, Overdrafts 77%.
• Medium businesses – Loans
91%, Overdrafts 93%.

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Banks: Government initiatives
• Enterprise Finance Guarantee Scheme
Underwriting part of bank lending to SME
• Project Merlin: targets for Banks to lend
Under Target for lending to small business by > £1bn
• National Loan Guarantee Scheme:
Government guarantees used to reduce interest rates (to bank which they pass
onto business)
• Funding for Lending
Banks borrow from Bank of England at reduced interest rates if lend onto SMEs
• Assisted Asset Purchase
RGF funding used to increase deposit on HP or Loan

11. Preparing for a Bank Lending Request
Bruce Pedrick,
Relationship Director, Cornwall

12. Customers Facilities Deposits Colleagues
Devon &
Cornwall
16,800 £1.75bn £1.40bn 180
SUPPORTING BUSINESS IN CORNWALL AND DEVON
•Lloyds net lending rose 8% during 2013.
•560 businesses joined us from competitors during 2013.
•Our teams are closely involved with other avenues to funding and key
professional advisors
•Local Lending Decision Making to minimum £500K (often £1M)

13. C - Character
C - Capability
C - Capital
P - Purpose
A - Amount
R - Repayment
T - Term
S - Security
Basics of Lending

14.  Why does you business exist (Your Purpose/Mission Statement)
 Where do you want to take it (Your Objectives)
 How will it get there (Your Strategy)
 What will it cost (Your Budget)
 Include reference to:
Staff/People
Competition
Customers/Suppliers
Marketing/Profile/Advisors
Premises
Sector specific market conditions/trends
Equipment required
USP – what makes me/us different
 SWOT Analysis – Strengths, Weaknesses, Opportunities & Threats
Key Documents – Business Plan

15.  Last 3 years Annual Accounts
 Most up to date Management Accounts
 Projected Cash Flow
 Projected Profit & Loss
 Projected Balance Sheet
 Specialist eg Rent Roll for Property Investors
 Rationale to support forecasts eg how you will increase the Gross Profit Margin
 Personal ALIE (Assets/Liabilities/Income/Expenditure)
Key Documents - Financials

16.  Fail to prepare, prepare to fail!?
 Local Lending Discretion up to min £500K (£1M in many cases)
 Approx 80% of Applications get Agreed and the remainder generally are
require more Information or restructuring
 Robust Appeals process
Why Applications Fail

17.  Prepare
 Know Your Business
 Speak to your advisors and the bank beforehand
Advice
For further information:
lloydsbankbusiness.com

18. SWIG Finance
South West Investment Group
www.swigfinance.co.uk
01872 223883
info@swigfinance.co.uk

19. What is
SWIG?

20. …a CDFI
Community Development Finance Institutions
(CDFIs) lend money to businesses, social
enterprises and individuals who struggle to get
finance from high street banks and loan
companies. They offer loans and support at an
affordable rate to people who cannot access
credit elsewhere
‘
‘
www.swigfinance.co.uk
01872 223883
info@swigfinance.co.uk

21. Operating across the
South West
£17 million to over 1,500 businesses since 1996

22. • National Start Up Loans programme
• Start ups or trading less than 18 months
• Loans up to £9,900
• Larger amounts in exceptional cases
• Fully funded business support
www.swigstartups.co.uk
01872 227933
STARTING A
BUSINESS?

23. LOOKING TO GROW?
SWIG Business Growth Loans
• Viable Growth and Start Up Businesses
• Unable to secure traditional finance
• Commercial rates of interest
• Up to £100,000

24. How to Apply
• Complete online form at www.swigfinance.co.uk
• We shall respond in 48 hours
• If all OK, proceed to full application
• Complete form and submit business plan
• Assessment, interview and decision in c.2 weeks

25. 3 Golden Rules
1. Keep it simple (we’re more interested in your
customers than technical specifications)
2. Be transparent (but your best face on, not a mask –
we need to understand your background)
3. Know your numbers (and please explain them!)

26. Business Support
We are linked into a wide variety of business
support agencies and other sources of finance
Your Business Business support Business Growth
+ =

28. Get in touch
www.swigfinance.co.uk
info@swigfinance.co.uk
01872 223883
SWIG Services Ltd
Lowena House, Glenthorne Court, Truro Business Park
Threemilestone, Truro, Cornwall, TR4 9NY

29. Business Plans,
Financial
Projections
(And a little bit on
“alternative sources of
finance”)
Richard Wadman –
Corporate Finance
Director

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“Business Plan”
• Business case
• Tailor to audience
• Informing v giving away IP
• “Compelling narrative”

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Structure of a business plan
• Front cover
• Contents
• Executive summary
• Background to the business
• Products and services
• Customers and markets
• Business operation
• Management
• Financial history
• Financial projections
• Appendices

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Projections: the perfect scenario
• Monthly integrated profit and loss, cashflow and balance
sheet covering a period of three years
• Documented assumptions
• Ability to sensitize the model

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Projections: the real world!
• Choose an approach that works for the business
• Focus on the KPIs of the business
• Make basic assumptions
• Compare to actual results

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Common issues
• Inconsistencies between Business Plan (narrative) and
Projections (figures)
• Profit ≠ cash
• Do not forget about tax (VAT and tax on profits)
• Match funding to cash requirements, business model &
exit strategy
• Read through documents ‘cold’

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Alternatives…
• Grants, debt and equity (3%)
• Asset backed lending
• “The crowd” - Rewards, Debt and
Equity
• http://www.brewdog.com/equityforpunks
• Supply Chain
• High Net Worth Individuals – EIS/
SEIS and Angel Co Fund
• “Access to finance” part of Small
Business, Enterprise and Employment
Bill

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British Business Bank
• £300m investment programme launched in April 2013 (part of £1bn allocated in 2012
Autumn Statement)
• The first £45m of Business Bank funds will be put into SME specialist lenders
Praesidian Capital Europe (£30m) and BMS Finance (£15m), helping
them offer a total of approximately £125m in new lending” (6 November 2013)
• The British Business Bank programme confirmed today that it is making a new
£40m to support further lending to smaller businesses through peer-to-peer
lender Funding Circle (25 February 2014).
• The British Business Bank has today published new guidelines for its Enterprise Capital Funds (‘ECF’)
programme that include a doubling of the maximum potential commitment it
can make to new ECFs to £50m (28 April 2014).
• Business Bank currently run directly by BIS (until?)
• http://british-business-bank.co.uk/

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SME perspective
Ben Treleaven – ISO
Spaces
“…Truro SME unlock £100k
to lead extra-space race”

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Discussion over
breakfast…
Now…
But
first…

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Actions/ follow up: assistance
• Presenters
• Oxford Innovation, Get Set for Growth,
Growth Accelerator, Growth Vouchers
Developments
• http://www.francisclark.co.uk/news-views/blog/
Topics for future breakfasts?
• International Trade
• The share
• An entertaining discussion of “basic tax”
• Protecting the family business
• Equity for SMEs
• Crowdfunding
Future…

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