Raising Finance

Funding can provide a crucial launch pad to grow your business. When raising finance for business, you need to know where to get the money from, how to apply for it, and whether you meet all the criteria.

Our experts can provide support in all aspects of business funding, from planning an investment or expansion, to meeting the funding provider. We can introduce you to a wide range of providers.

For many years, we have been helping businesses to successfully apply for funding to kick start growth.

Bank Funding

Bank funding, or the lack of, is one of the most frequently debated and discussed subjects in the business world today. Banks are constantly criticised for reluctance to lend to small and medium-sized enterprises.

The right approach to bank funding applications is, however, a robust financial model together with a narrative business plan which will provide the key to success. The business plan together with accurate and timely management accounts information will provide confidence to the banks and make them more likely to lend. In our experience, with the right approach, banks have still got the appetite for lending to the right businesses.

Asset Based Lending (ABL)

Traditional Asset Based Lending revolves around “Receivables”, i.e. invoice discounting or factoring. ABLs typically will lend against a debtor book and increasingly are providing other structured debt solutions by way of equipment, property and stock lending and unsecured loans (cash flow lending).

Asset Based Lending has become increasingly popular in recent years as an alternative to traditional bank overdraft. The working capital solution provided by an ABL is more flexible than overdrafts for growing businesses and is also a preferred form of lending for the banks.

Businesses involved in contractual work are less suitable for invoice discounting due to the risk attached to part-fulfilled contracts however specialist ABLs such as Bibby and Aldermore can provide solutions in this area.

Some ABLs will provide standalone equipment finance, either for new purchases or as refinance of existing assets.

Development Capital

Development capital is equity funding for the expansion of established and profitable firms (those that have passed the start-up phase) which is less risky and more rewarding than funding new ventures.

Providers of such capital include the Business Growth Fund, funded by the mainstream banks for investments between £2 and £10m, for which minority equity stakes are required (10% – 40%).

For smaller businesses, Mercia Asset Management has a private equity fund. This fund provides finance from £100k to £10m to expanding trading businesses in which the fund manager will require an equity stake. Capital structures can include a combination of equity, quasi-equity or mezzanine capital. 

Private investors and investor “clubs” are also a good source of development capital.

Private Equity

Private equity is a funding source provided by a private equity firm, a venture capital firm or an angel investor, and consists of equity securities, either by way of ordinary shares or preference shares. Such equity is not operated on a stock exchange.

Private equity firms provide:

  • Capital for leveraged buy-outs of companies or assets by way of introducing debt and equity into a target business. 
  • Growth capital (expansion or Development Capital), and venture capital provided to early-stage high potential, high growth start-up companies.
  • Venture capital to start-up and young growing companies in the UK include Mercia, The Growth Company, Seneca Partners and PHD Equity Partners.

Angel investors will typically be high net worth (HNW) individuals, who look for investment opportunities, either acting alone or as part of a syndicate.

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