| Informed Funding |
Message from Chris Dines, CEO of Informed Funding
It is nearly six months since we launched Informed Funding, with the aim of helping businesses look for finance in an increasingly complex market. The old rules of business finance continue to crumble, with the high street banks continuing to reduce their total commitment to SMEs, while expanding their own product range. At the same time, there is an almost endless stream of new entrants coming into the market. To put that in context, Informed Funding now provides guidance on 16 different forms of business finance, and carries information on nearly 500 discrete suppliers of loans and equity.
Not only do we think we are the biggest and best at providing Information on what is available, but we are increasingly enabling our business users to better understand their finance options through use of self-test tools and other directional support. Remember that we are a genuinely independent and unbiased source of guidance – Informed Funding charges no broking or funding fees, and our basic services are free to business users. We are increasingly busy as well, with over 1,000 visits by businesses to informedfunding.com each week.
We hope you join us at our second Funding Fair on 24 September – once again hosted in conjunction with Workspace Group, the largest SME landlord in the UK. We have a stunning line up – whether you are looking for finance or simply interested in learning from the success of a range of UK businesses.
Make sure you don’t miss out and BOOK YOUR PLACE. I look forward to seeing you there.
Regards
Chris
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Following the success of our Funding Fair Launch at the end of February, we will be hosting another Funding Fair on the 24th September at the on Southbank. We once again plan to have a full afternoon and evening of informative sessions. This time we will hone in on “What works in new finance for SMEs”. The aim of the fair is to provide you, business owners, PRACTICAL education and information on business finance.
The sessions will be clearly focused on how SMEs can start to think differently about the way they might finance themselves. Sessions will include ‘Crowd Funding Readiness’ and ‘P2P Readiness’ where we will case study some of the success stories, talk directly to leading Crowd Funding and Peer-to-Peer specialists and investors. In these sessions we will also take participants through our diagnostic tool to test their potential for funding.
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How to really make money from your ideas:
We will also host a seminar focused on IP – How to really make money from your ideas where you will hear from businesses telling their success stories and have the opportunity to talk directly to experts from the Intellectual Property Office about your own position.
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Guest Speakers Announced So Far:
will be joining us for the evening for drinks and canapés. Kevin is a self-made multi-millionaire through property. You may have also heard of Kevin as he was on the Secret Millionaire programme. He has very recently launched a book ‘Rich Rules’ which is his Top 10 to getting rich. His 7th rule is ‘Know how to raise capital’. Kevin is an engaging speaker and will be sharing his stories of success and challenges and will specifically talk about raising that much needed capital. He will also be bringing signed copies of his new book. Definitely not one to be missed!
Brompton Bikes began life in its inventor’s flat in 1975, and is now the UK’s biggest bike manfacture with 45,000 of its beautiful folding bikes delivered in 2014. It’s a great success story, with a focus on design, manufacturing and product excellence. The business is soon to move to new 86,000sq ft premises in Greenford.
We will be interviewing Lorne Vary, Brompton’s Chief Financial Officer, a key member of the team looking to grow Brompton to a 100,000 strong output by 2021. We will talk to Lorne about what is underpinning the success of the business, how it’s financed, why is so important as a base, and what tips he can offer to entrepreneurs looking to fund the growth of their business. Lorne will also take questions from the audience and over drinks.
We will also be offering a brand new Brompton bike to the winner of our free to entre draw!
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Starting up a business can be straight forward, and the same applies to raising small amounts of finance. The bigger challenge comes when the business is established, but still has a great growth opportunity. Taking a business from “small” to “medium” can be complex, challenging and risky – but the upside can be huge. Raising finance for this phase of growth can also be very challenging.
This is a highly practical seminar that also gives attendees the chance to test out their own “business case” for raising growth finance. This will be done during the main group sessions, but also through one to one workshops (requiring separate bookings), where the strengths and weaknesses of your business strategy will be reviewed by experts.
There will be a briefing on the different forms of finance that are available directly from those who supply the funds - specialists from Crowd Equity, Venture Capital and Private Equity. They will all set out what is expected from you.
As with all our seminars, we will have live case studies with businesses that have successful raised capital recently. It’s your chance to ask questions!
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When a company is growing, one of the biggest challenges is converting what is delivered to customers into cash. The amount owed by business customers is typically GREATER than amounts owed to banks or other sources of finance. The most often quoted reason for business failure is that “my customers weren’t paying/couldn’t pay/paying too slowly!”
This seminar will help businesses improve their cash flow through:
- A workshop process that helps you identify where you can improve the way you and your team are managing trade cash flow. This starts with the sales process!
- Learning how to credit check your new customers, and ensure that you hear early of any cash problems they are having.
- Identifying specialist finance that might assist in converting invoiced sales to cash. We will be joined by experts in both traditional invoice finance and alternative finance.
All delegates will get free use of special diagnostic tool designed by Informed Funding – this will benchmark how your business performs, compared to others.
Cost: The event is free to Registered Business Members of Informed Funding. £75 (including VAT) to others. Tickets are limited.
Customers of the Workspace Group have free premium access to Informed Funding including free membership and preferential access to our seminars.
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Buzzacott's Summer 2015 Budget Report
- Buzzacott, a key sponsor of Informed Funding, have put together a comprehensive guide to the 2015 Summer Budget that answers how the 2015 Summer Budget will affect you.
Bridging the gap: Short term finance alternatives
- In these cash squeezed times, bridge loans are perfect to enable individuals and businesses and borrow on a short term basis, writes Jo Chapman, Marketing Director at Informed Funding.
Seminar Blog: Getting a deal (or a better deal!) from a bank
- Informed Funding welcomed four representatives from banks who answered questions about SMEs applying for finance. This blog summarises the seminar.
Introducing: Informed Funding’s New Website Homepage!
- We feel that easy access to information is vital for growing businesses that are deciding how best to proceed when it comes to financing their business. For this reason, we have re-designed our homepage to make it easier than ever to find finance using out platform.
Interview with Roger Fenwick, NatWest's Regional Director in
- When it comes to lending to small businesses, banks don’t have the greatest of reputations. Ahead of the InformedFunding seminar on getting a better deal from your bank, we talked to Roger Fenwick, NatWest's Regional Director in .
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How big is the potential market for P2P lending to businesses? Today, Funding Circle and ThinCats, the two largest business lending platforms, have £475.67m and £78m respectively of loans outstanding. The major banks’ stock of lending to smaller businesses stood at £33.8bn at the end of Q1 this year, according to the British Bankers’ Association stats. That means P2P platforms now account for a little over 1.6% of the outstanding stock of lending to smaller businesses (although the P2P figures I’ve given include a small amount of property lending that would figure elsewhere in the bank stats but let’s leave that small quibble aside for now).
Working out how big the P2P share could get is at best an inexact science but it’s obvious that it is going to increase, given that the banks’ stock of lending to small businesses continues to fall as they repay more than they borrow, while the P2P lenders continue to expand their books rapidly, albeit from a far lower base.
While looking for something else, I recently came across the info that the SME Finance Monitor gathers on this area as part of its waves of survey work that question several thousand small businesses each quarter. According to the Monitor, “awareness of crowdfunding” among businesses that either use or would consider using external finance has been growing steadily, from around 25% in 2013, to 32% in the second half of 2014 and on up to 38% in the first quarter this year. So awareness among potential customers is clearly moving fairly quickly in the right direction.
Taking the results for the 13,463 businesses surveyed in the 12 months to March 2015, awareness averaged out across the year at 31%, leaving 69% of the market still unaware that P2P exists as an alternative source of funding – plenty of room for growth there.
But among the 31% who were aware, two-thirds said they wouldn’t consider using this source of funding for their business. About 10% would consider it but aren’t using it, and the remainder either use crowdfunding already or have applied – roughly in line with the figures for market shares at the top of the article.
You could simply extrapolate those figures in a straight line (always a dangerous activity) and conclude that about a third of those businesses that use external debt funding are potential customers for P2P lending platforms, and that at least 5% of these businesses might actually have loans outstanding from this source at any one time. Extrapolating like this is always risky, as I say, but you have to start somewhere.
The interesting questions revolve around what is holding back the two-thirds of businesses that are aware of P2P lending but say they wouldn’t use it. I’d be very interested to hear views on this in the comments box – might it be the need to publish their financial data, for example? Perhaps questions on this are something the SME Finance Monitor should add to its survey work? Perhaps the P2P Finance Association should be lobbying for a seat on the steering committee that oversees the SME Finance Monitor?
Also, I can’t help wondering whether their choice of terms is confusing the picture. Most people nowadays associate “crowdfunding” with equity investment and P2P with lending. Given the SME Finance Monitor is all about debt finance, I’m assuming that survey respondents understand that they’re being asked about P2P lending rather than equity investment. That may not be a safe assumption and confusion on that score would definitely invalidate the figures. The SME Finance Monitor could be a really useful tool for mapping the reach of P2P lending into the SME market – but not if there’s any confusion among the survey respondents over what they’re being asked about.
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Join us for an expert panel discussion about how to address the gender gap in Global Mobility assignments.
Why is the percentage of female Global Mobility assignees so much lower that that of male assignees? What are the implications of this imbalance for businesses and individuals alike, and what can be done to address it?
We have assembled a panel of experts in Global Mobility to provide insights and practical examples of the challenges and success stories they have experienced in encouraging and securing more international assignments for female employees.
We are keen to provide value to our attendees by encouraging discussion, enabling you to participate with and speak to our panel and your peers. Plenty of time will be given for an open Q&A too.
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There is a vast array of different types of funding options for businesses. In this newsletter we provide an overview on a further three funding methods firstly, with a deeper look into Equity Crowd Funding.
Larger Business Loans
For companies that want to fund a significant investment project, worth say £250,000 and upwards, the preferred route will probably be to seek debt finance, assuming that they can show a reasonable history of profitable trading and an acceptable balance sheet. This funding could take a wide variety of forms, from conventional loans to an issue of non-transferrable bonds to private investors.
However, it will almost certainly have to be secured, using either the assets of the business, or the personal property of the directors, or a combination of both. In some cases, part of the funding package may be provided via subordinated, or mezzanine, debt, which ranks behind secured borrowings and therefore carries a higher interest rate. Loans can vary in length from a few months up to five years and more.
Expert Tips:
- The total amount secured and the nature of security given must be disclosed in the financial statements as must the details of any personal guarantees given by the directors of the company. If filing abbreviated accounts, only the former need be disclosed.
- Loan financing will increase the liabilities of the company and will increase the financial gearing. This may make securing future borrowing more difficult. However, it will be clear on the face of the balance sheet how much the company is liable to repay within one year, and in greater than one year.
- This type of lending may come with covenant restrictions attached which may trigger early repayment if breached and may also limit future activities of the business.
To view and access funders that offer Larger Business Loans, register with Informed Funding.
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Private Equity
Private Equity investors usually acquire established companies in order to help accelerate their growth, for example by expanding into international markets or by acquiring competitors in order to consolidate their position. Transactions can include management buy-outs, management buy-ins and refinancings that allow owner-managers to stay in place while realising a portion of their equity value. PE funds usually aim to hold their shares for anything between three years and seven years.
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Public Equity
Raising funds via the equity markets involves offering shares in a company to the public that will be tradable on a public market such as the Stock Exchange or any of the smaller markets such as ISDX. If companies are seeking more than the equivalent of € 5m they will be required to publish a prospectus, a legal document that complies with the EU Prospectus Directive.
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The homepage has been simplified so that users will follow five simple steps to find the finding options they need.
The first step is to register, which gives full access to the funder microsites featured on our website, as well as all the tools that help businesses determine their funding options.
Our useful tool titled ‘What’s your funding challenge?’ helps filter the types of relevant funding options based on a business’ circumstances. Every business is unique, but specific factors will establish that some funding options are more suited than others. Filling this in is the second step.
The third step is to browse the funder’s microsites, of which we have over 80, which is more than double than any other platform!
To determine whether you are ‘funding ready’, follow step 4, which is a self-diagnosis tool that greatly increases the readiness to apply for funding.
Finally, the fifth step is to contact the funders directly through these microsites to officially start your application process.
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