Gary Trueman Regional Director. Birmingham, Coventry and Warwickshire

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1 Gary Trueman Regional Director Birmingham, Coventry and Warwickshire 1

2 Funding Funding What sources are available? How can we support you to get acce What can you do to support yourselv What can an SME use to fund itself to build future success? Capital Assets Trading Assets 2

3 Helping you unlock cash tied up in your capital assets 3

4 Points to consider Owned assets Why not unlock the cash from your own assets? Why wouldn t you transfer the cost / risk of depreciation? Do you need a capital injection into your business? For owned assets Unlock the true value of your assets Sale and Leaseback Leasing frees up valuable capital for the areas where it is needed most 4

5 Points to consider New assets Why own an asset when you cannot guarantee future values? Why pay the VAT on day one? Why not have the freedom to update antiquity for leading edge? For new assets Consider funding methods outside of traditional facilities Preserve working capital by financing equipment over the course of it s Operating cash generating Leasing and life Contract Hire 5

6 Funding Funding What sources are available? How can we support you to get acce What can you do to support yourselv What can an SME use to fund itself to build future success? Capital assets Trading Assets 6

7 Raising working capital and protecting your assets Popular misconception Invoice finance is the lending of last resort 7

8 What is invoice finance? Raising cash against arguably the largest asset of your business An immediate cash injection of up to 90% of value of unpaid invoices Flexible funding solution linked directly to your sales ledger Removes the delay between doing the work and getting paid Provides additional credit control Trade insurance optional No need for additional security 8

9 What else is available? Alongside the effective use of a business s assets, there are the more conventional sources of funding: Committed overdrafts Commercial mortgages Enterprise Finance Guarantee Scheme European Investment Bank funds Manufacturing fund 9

10 Enterprise Finance Guarantee (EFG) Government operated Available to businesses with firm business proposals that can t get a conventional loan due to lack of security The Government will issue a guarantee to the bank, ensuring Who is it we available have to? the security we need to offer you the loan Businesses with a turnover of less than 25 million in the last 12 months Open to sole traders, partnerships, franchises, cooperatives and limited companies 10

11 Manufacturing Fund As part of our existing commitment to support UK businesses, we are specifically supporting the manufacturing sector by making 1 billion of new lending available. Loan Amount: 250,000 to 25 million Flexible Terms: 2 year interest only or 3 year interest only with the ability to partially repay in year 3 Arrangement fee: 0.75% of the loan amount 11

12 Manufacturing Fund contd. Fund availability The Fund will be made available on a staggered basis up to the total Fund amount of 1 billion. Each release of funds will be available for a fixed period, at a quoted interest rate, on a first come first served basis. The first release is available for drawing between 14 January 2010 and 14 May However customers must apply for this release no later than 31 March Option 1 Option 2 Loan term 2 years 3 years Arrangement fee 0.75% 0.75% Interest rate Fixed rate 3.40% Fixed rate 4.30% Capital repayment holiday 2 years Up to 3 years Option to repay capital during the term of the loan No Yes, but only in year 3 12

13 Case study Non banked business, lease to trading premises expired. Landlords sold 40% of site forcing business to relocate staff and machinery into remaining 60% Including additional capital expenditure to modernise, total funding requirement circa 2million Historic and forecast trading information positive and supported by a robust Business Plan and strong management team. However, security base is too weak to support total funding needed on conventional terms. In conjunction with the Accountants, Advantage West Midlands and the management team we worked closely to put in place a funding package. Advantage West Midlands grant funding 400k RBS Invoice Finance facility 800k Lombard Asset Finance line 570k RBS EFG 4yr loan 230k 58 jobs secured and fresh investment leaves the business well placed to 13