Angel investors, VC's, asset finance, trade finance, secured loans, unsecured loans, crowd funding, invoice finance... The range of funding options available to a growing business are vast, and making sense of these can be confusing.
Selecting the most suitable option for your specific requirements is vital in order to present your business in it's best possible light to prospective financiers. This is where our business finance partner can offer assistance. By getting a thorough understanding of your business's needs, our finance partner can help you decide upon the most suitable funding options for your business growth plans, and also assist you with becoming 'investment ready'.
What makes your business an 'Investable proposition'
There are many factors that financiers and potential investors will consider when deciding where to put their money. There will be a consideration of factors such as the level of risk involved, the potential return on investment, the stage the business is at, the sector in which it operates etc. For example, banks may have a very different appetite for risk than an 'business angel', and both may have very different expectations for ROI from their money. This is why it's so important to choose the right type of funding for your business growth, as what is an 'investable proposition' to one prospective investor may not be for another.
Once they've helped you decide on the most appropriate source of finance for your business, our finance partner can help you to become 'Investment ready'. Having a robust and credible business plan is probably one of the single most important factors to successfully securing finance for your business. It lays out your vision for growth and the steps needed to get there, making it an essential tool for attracting financing for your business. By assisting with matters such as business planning, financial projections, governance, building a team, proof of concept, refining your 'pitch' and more.
Minimising an investor's risk in funding your start-up business
Start-ups are notoriously risky investments. The failure rate of new businesses are widely publicised, so if you are looking at securing investment in a new venture that has growth potential, it is important that you consider how you can make your proposition as attractive as possible to prospective investors.
There are two key, and very generous, tax breaks that investors look for when investing in new businesses. These are UK government schemes designed to help smaller higher-risk trading companies raise finance by offering a range of tax relief to investors who purchase new shares in those companies.
EIS – Enterprise Investment Scheme
The 'EIS' is designed to help small, high-risk companies raise finance by offering tax relief on new shares. It’s aimed at the wealthier, sophisticated investors and enables them to invest up to £1,000,000 in any tax year, receiving 30% tax relief on their investment.
SEIS - Seed Enterprise Investment Scheme
The 'SEIS' is an incredibly generous scheme that was introduced in 2012. It aims to encourage seed investment in very early stage companies. Investors(including the company's own directors) can receive initial tax relief of 50% on investments up to £100,000. In addition, they can also benefit from Capital Gains Tax (CGT) exemption for any gains on the shares purchased through the SEIS. The maximum amount to be raised for each company is £150,000.
What's more, with both schemes the risks to an investor are further reduced by the 'loss relief' benefits they receive if they end up selling the shares at a loss, or if the company folds.
It's clear to see why many investors would only consider investing in a start-up if it is registered for EIS or SEIS. Our finance partners can assist with all matters relating to EIS and SEIS, ensuring that your company meets the criteria and assisting you through the whole process.
Contact us today to arrange a free consultation with our finance partner and see if we can Help2Grow your business with the right financial solutions.