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Finance Options: A blog by Connect Yorkshire CEO Nick Butler

9th June 2017

Last week we held one of our Training Seminars, this time delivered by our Partner Garbutt  & Elliott (“G&E”) with help from the Business Enterprise Fund (“BEF”) at The Chambers Serviced Apartments, 30 Park Place Leeds LS1 2SP which had an excellent room for the event. About 30 attended. In this blog I am mainly going to discuss alternative finance option after touching on traditional ones


Banks


Overdraft is still the most common finance used; it is very flexible, banks usually need asset cover and/or personal guarantees-avoid PGs if at all possible.


Asset Finance


Three main types.


Commercial Mortgages – up to 70% of value, repayment up to 25 yrs, interest as low as 2%+ base rate


Invoice Finance – Factoring  or discounting of your debts-you get about 90% of the debt


Asset Finance – Loans against assets usually equipment or vehicles


Governments Backed Scheme


The Enterprise Finance Guarantee fills a security gap that you can’t supply for your bank.. 75% of the loan is guaranteed by the Govt. A PG is required. Lend is typically  £25k-£1m, repayment 1-10 yrs 2%pa payable to the Govt on top of lender interest


Peer to Peer


There are 2 main types of peer to peer finance- loans and equity. The main loan provider is Funding Circle, £2.3 billion, 24597 businesses have had finance and there are 61690 investors. Loans £5k-£1m, unsecured up to £350k with a PG, up to 5 yrs. Needs 2 yrs+ trading, good credit history and 1 yrs filed accounts.


The main equity provider is Crowdcube, £310m, 525 successful money raises, 48% market share over 400k registered members, Minimum of £20k. Optimum range £100k-£150k. Max pitch 30 days then legals 6 weeks


The main Yorkshire peer to peer operation is rebuildingsociety.com which is a member of Connect Yorkshire. £11.6m raised and investors get an average 10.5% return. Makes loans to SMEs in the £25k-£300k range repayable 6-60 months, Interest negotiable


Business Enterprise Fund(BEF)


BEF will lend for most purposes


Up to £50k unsecured, up to £150k secured,  no early repayment penalties


Start-Up Loans up to £25k per director (max4) 6% fixed rate


Northern Powerhouse Investment Fund provides Microfinance £25k-£100k, Debt Finance £100k-£750 and Equity Finance up to 2m


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