WHERE LOCAL BUSINESS GROWS

Business Finance Explained

The most suitable finance option for your business depends on many things, including how much funding you need, your current business revenue or if you’re a new business, whether or not you’re willing to offer personal assets as security and whether or not you’re willing to sell shares. This guide explains the different types of funding available.


Investment Finance
 

Investment finance (also known as equity finance) involves selling part of your business (‘shares’) to an investor. The investor will take a share of any profits or losses that the company makes.

Advantages include:

  • investors can bring new skills and opportunities to the business, eg marketing or exporting overseas
  • you won’t have to pay any interest, or repay a loan
  • you share the risks of the business with your investors
Disadvantages include:

  • it can be a demanding, expensive and time-consuming process
  • you’ll own a smaller share of your business (although your share could eventually be worth more money if your business succeeds)
  • you may have to consult your investors before making certain management decisions
  • only limited companies can sell shares, so you can’t raise money in this way if you’re a sole trader or in a partnership
You should get professional advice about business finance.

Crowdfunding
 

Crowdfunding (also known as crowd financing or crowd-sourced capital) involves a number of people each investing, lending or contributing smaller amounts of money to your business or idea. This money will then be pooled to reach your funding target. Your idea will usually be showcased through a crowdfunding website.

Advantages of crowdfunding include:

  • it provides an alternative to funding from conventional means, eg bank loan
  • you can raise finance relatively quickly, often without upfront fees
  • it can raise awareness of your new business
Disadvantages of crowdfunding include:
  • your idea could be copied if you haven’t protected it with a patent or copyright
  • any money you raise will normally be returned to investors or contributors if you don’t reach your funding target
  • crowdfunding is mostly unregulated (but from 1 April 2014, loan-based and investment-based crowdfunding will be regulated by the Financial Conduct Authority)

Loans
 

A loan is credit, usually in the form of cash, that you borrow and repay over an agreed length of time. Banks, community development finance institutions, other businesses and even friends and family can provide businesses with loans. As well as repaying the amount you’ve borrowed, you normally have to pay interest on a loan. The amount will depend on:

  • how long you need the loan for
  • how much you borrow
  • whether the loan is ‘secured’ - eg if you own your home and agree to transfer ownership to the loan provider if you don’t keep up your payments
  • other factors, like the Bank of England base rate
The interest rate may be:
  • fixed, so it won’t change for the length of the loan
  • variable, so it will change with the Bank of England base rate or the bank’s cost of borrowing
Reasons for getting a loan

Loans are generally suitable for:
  • paying for assets - eg vehicles or computers
  • start-up capital
  • instances where the amount of money you need won’t change
It’s not a good idea to take out a loan for ongoing expenses - you might find it difficult to keep up repayments.

Advantages include:
  • unlike overdrafts, loans are not repayable on demand - this means that you’re guaranteed the money for the whole term (generally 3 to 10 years)
  • loans can be tied to the lifetime of equipment or other assets you’re borrowing the money to pay for
  • you won’t have to give the lender a percentage of your profits or a share in your company
Disadvantages include:
  • loans aren’t very flexible - eg you may have to pay charges if you repay early
  • you might struggle to meet monthly payments if your customers don’t pay you
  • if your loan is secured against your personal property or assets (eg your home) you could lose them if you don’t keep up the payments
  • the cost of repayments for variable rate loans can change, making it harder to plan your finances
You can appeal if you’re refused a business loan by a bank.

Grants
 

A grant is an amount of money given to an individual or business for a specific project or purpose. You can apply for a grant from the government, the European Union, local councils and charities. You won’t need to pay a grant back, but there’s a lot of competition and they are almost always awarded for a specific purpose or project.

Advantages include:

  • you won’t have to pay a grant back or pay interest on it
  • you won’t lose any control over your business
Disadvantages include:
  • you’ll have to find a grant that suits your specific project, which can be difficult
  • there’s a lot of competition for grants
  • you’ll usually be expected to match the funds you’re awarded, eg a grant might cover part of the cost of a project but you’ll have to fund some of it yourself
  • grants are usually awarded for proposed projects, not ones that have already started
  • the application process can be time-consuming

Overdrafts
 

An overdraft is a credit facility you agree with your bank. It allows you to temporarily spend more than you have in your account to cover short-term financing needs. It should not be used as a long-term source of finance - if an overdraft is used persistently your bank may question whether you are in financial difficulty. You’ll need to agree your overdraft limit with your bank. You’ll usually be charged interest on any money you use, and may also have to pay a fee.

Advantages include:

  • it’s flexible - you only borrow what you need at the time, making it cheaper than a loan
  • it’s quick to arrange
  • you normally won’t be charged for paying off your overdraft earlier than expected
Disadvantages include:
  • there will usually be a charge if you want to extend your overdraft
  • you could be charged if you go over your overdraft limit
  • the bank can ask for the money back at any time
  • you can only get an overdraft from the bank that you hold your business current account with
You can appeal if you’re refused an overdraft by a bank.

Invoice financing
 

Invoice financing is where a third party agrees to buy your unpaid invoices for a fee. Invoice financiers can be independent, or part of a bank or financial institution. There are 2 types of invoice financing in the UK.

Factoring

‘Factoring’ - also known as ‘debt factoring’ - usually involves an invoice financier managing your sales ledger and collecting money owed by your customers themselves. This means your customers will know you’re using invoice finance.

  1. When you raise an invoice, the invoice financier will buy the debt owed to you by your customer.
  2. They make a percentage of the cost (usually around 85%) available to you upfront
  3. They then collect the full amount directly from your customer.
  4. Once they’ve received the money from your customer, they make the remaining balance available to you.
  5. You’ll have to pay them a discount charge (interest) and fees - the amount depends on which invoice financier you use.
Example

You’re owed £40,000 by a customer. You sell the invoice to an invoice financier for £34,000 (85%). They collect £40,000 from your customer and pay you the remaining £6,000 when they receive the money. You pay them interest and any fees you owe.

Invoice discounting


With ‘invoice discounting’, the invoice financier won’t manage your sales ledger or collect debts on your behalf. Instead, they lend you money against your unpaid invoices - this is usually an agreed percentage of their total value. You’ll have to pay them a fee. As your customers pay their invoices, the money goes to the invoice financier. This reduces the amount you owe, which means you can then borrow more money on invoices from new sales up to the percentage you originally agreed. You’ll still be responsible for collecting debts if you use invoice discounting, but it can be arranged confidentially so your customers won’t find out. Both kinds of invoice financing can provide a large and quick boost to your cash flow.

Advantages of factoring include:
  • the invoice financier will look after your sales ledger, freeing up your time to manage your business
  • they credit check potential customers meaning you are likely to trade with customers that pay on time
  • they can help you to negotiate better terms with your suppliers
Advantages of invoice discounting include:
  • it can be arranged confidentially, so your customers won’t know that you’re borrowing against their invoices
  • it lets you maintain closer relationships with your customers, because you’re still managing their accounts
Some disadvantages of invoice financing are that:
  • you’ll lose profit from orders or services that you provide
  • invoice financiers will usually only buy commercial invoices - if you sell to the public you might not be eligible
  • it may affect your ability to get other funding, as you won’t have ‘book debts’ available as security
If you use factoring:
  • your customers may prefer to deal with you directly
  • it may affect what your customers think of you if the invoice financier deals with them badly

Leasing and asset finance
 

Leasing or renting assets (eg machinery or office equipment) can save you the initial costs of buying them outright.

Advantages include:

  • you’ll have access to a high standard of equipment that you might not have been able to afford otherwise
  • interest rates on monthly instalments are usually fixed
  • it’s a less risky alternative to a secured bank loan - if you can’t make payments you’ll lose the asset but not, for example, your home
  • the leasing company carries the risks if the equipment breaks down
  • as long as you make regular repayments for the period of the lease, the agreement can’t be cancelled
  • it’s widely available
Disadvantages include:
  • you can’t claim capital allowances on a leased asset if the lease period is less than 5 years (or 7 years in some cases)
  • it can be more expensive than buying the asset outright
  • some long-term contracts can be difficult to cancel early
  • you may have to pay a deposit or make some payments in advance

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News

17 results found, page 1 of 2.  
Funding deal gets business buy-outs off to a flying start

Wednesday 20 June 2018

A funding deal put together by ABL Business has enabled Ignite Capital to purchase the first investment in a portfolio, by acquiring Bristol-based manufacturer and wholesaler Albert E James & Son Ltd. Corporate finance brokers ABL Business, based in Cleckheaton, structured a full asset based lending package from funder IGF group to support the seven figure purchase of the company. Established in 1962, Albert E James & Son manufactures and markets bird feeds that have been developed to match the nutritional requirements of particular birds and breeds. The range includes corn feed that has been designed to optimise the performance of racing pigeons. The company operates under two brands, Country Wide and Willsbridge Leeds-based Ignite Capital was formed in 2017 by managing director Paul Thompson. A corporate finance boutique, it offers a range of services relating to the sale and purchase of businesses and is currently in the process of developing its own portfolio through the acquisition of a handful of UK SMEs. Management buy-in candidate Joe Mogg invested alongside Ignite as part of the transaction and is now responsible for the day-to-day running of the specialist bird feed manufacturer as managing director. Joint Managing Director of ABL Business Andy Redman said: “Albert E James & Son is a successful business with much potential for the future, so we were delighted to be able to support Ignite Capital to complete the purchase, ensuring that it can now go on to be developed to even greater heights." “This is an excellent example of how we get to know our clients’ businesses and provide the appropriate funding, chosen from a broad range of options, then tailored to suit their specific needs. We felt that an asset based lending package was most suitable in this case as it is a very flexible funding arrangement. It enables a business to raise the large amount of capital required to purchase a high-value company by securing the loan against a variety of different assets that they already own.” Managing Director of Ignite Capital, Paul Thompson said: “ABL Business were quick to recognise the potential of the business and were able to identify a selection of potential funders to support the transaction. Now the acquisition is complete, we look forward to developing and growing the business."
Posted by ABL Business Ltd
New partnership to fund entrepreneurial visions

Tuesday 24 April 2018

A new partnership has been formed to provide commercial finance to entrepreneurs who want to launch or grow businesses across the Yorkshire region. The recently-launched Business Catalyst Club has agreed a deal with commercial finance brokers ABL Business to create Business Catalyst Finance. The partnership will complement the equity and venture capital activities of the Business Catalyst Club by providing access to a broad range of funding options such as commercial property finance, business loans and venture capital along with alternative finance opportunities like asset-based lending and peer-to-peer lending. The “dealmaker” Business Catalyst Club was recently launched to promote business growth by creating beneficial relationships, bringing together entrepreneurs, investors and decision-makers from across the region to share new and exciting opportunities. Their invitation-only quarterly lunches create an effective platform for a select number of ventures seeking capital to showcase their proposals to members and guests – many of whom are business angels, private investors and institutional lenders. Proposals are considered from start-ups to more established trading businesses. The new collaboration with Cleckheaton-based ABL Business follows the organisation’s first event held at Manahatta Greek Street, in Leeds. The partnership has already been called on to feed into a number of projects resulting from the event, including sourcing a business loan for a software company, organising asset finance for a machinery rental company and coming up with a bespoke cashflow package for a facilities management firm. Business Catalyst Club Founder and Director Graham Shiers said: “We had an overwhelming response to the launch – we have hit the ground running and are already helping to bring some imaginative opportunities to fruition. “We now want to add even more value by broadening the way we help entrepreneurs to source funding for their projects alongside our role in facilitating the right commercial and professional introductions. As well as enabling opportunities through Venture Capital, Business Angels and other investors, we can now help people access commercial finance support from over 120 lenders available through our ABL Business partners”. Joint Managing Director of ABL Business, Andy Redman, said: “We were delighted to attend the first Business Catalyst Club lunch which brought together key players from across the region, representing a whole range of sectors. The event attracted entrepreneurs armed with an array of ambitious and imaginative business ideas. “The event was truly inspirational. We were already impressed with what Graham is doing and had felt inspired to get involved on a much deeper level. By joining forces, we will be able to reach out to the Business Catalyst Club’s extensive network of contacts and we’re eager to play our part in turning some great projects into reality”. The next Business Catalyst Club lunch will take place at a chosen venue in Leeds on Thursday, May 17. For further information visit www.businesscatalystclub.co.uk
Posted by ABL Business Ltd
Interested in Finding Out What Business Banking Can Do To Help Grow & Develop Your Business

Thursday 12 April 2018

On the 25th April 2018 Matt Caie, who is Barclays Business Manager in Huddersfield, will be with us in the 3M Buckley Innovation Centre on Firth Street, Huddersfield. Matt specialises in Business Banking, seeking to help grow and develop businesses through regular contact and advice and assisting companies in overcoming the challenges faced in meeting goals. Why not pop along to our Business Engagement Centre between 1pm and 4pm to have a chat and get some no obligation, business banking advice for your company! Look out for future dates/times that Barclays and other Business Support Specialists are with us and remember, the Business Engagement Centre is open Monday to Friday 9am to 5pm to help address the bespoke needs of your business and to provide no obligation, impartial advice and solutions or just a general chat about your company and any challenges you face. We look forward to seeing you!
Posted by 3M Buckley Innovation Centre
Accountants branch out to offer end-to-end financial services

Wednesday 07 March 2018

Yorkshire-based Pierrepont Accountants have expanded their business offer by branching out into the commercial finance sector. The long-established company in Holmfirth, near Huddersfield, has traditionally specialised in providing accounting, taxation and payroll services to small businesses, helping them to improve their profitability and grow. The innovative new business arm enables Pierrepont to offer a fully-rounded package of financial services, providing end-to-end support for clients. Additional services will include support in areas like accessing commercial property finance, business loans and venture capital along with alternative finance options such as asset-based lending and peer-to-peer lending. Pierrepont Director Jonathan Hill, a CIMA registered accountant, said: “We’ve always prided ourselves on offering a friendly, personalised service, which builds up a strong relationship of trust. Recently we’ve had a lot of clients who are ready to grow their business asking for advice on how to access the necessary finance. Others have needed help to overcome cashflow problems identified through our forecasting process. “At a time when face-to-face contact is widely being replaced by automated services, we’ve found that many business owners are uncomfortable about sharing their sensitive financial information with numerous, often unfamiliar, organisations. In a nutshell, they prefer to talk to one trusted individual with a single central point of contact. “So, we decided to respond by introducing this additional function into our business mix. This now enables us to accompany our customers along the whole of their journey and allows them to obtain all their financial support in one place. We have expert advisers in place with access to over 120 finance companies available to meet each customer’s individual commercial funding needs.” For further information visit http://pierrepont.accountants/ Caption (Landscape pic) L-R Accountants Dan Smith and Carole Pierpoint, Trainee Accountant Katie Walden, Director Jonathan Hill and Payroll and Pension Administrator Amy Robison.
Posted by ABL Business Ltd
GDPR

Friday 23 February 2018

Our GDPR event March 1st is sold out! However, we do have a waiting list, so if you haven't got a place, please message or call and speak with Lucy 01484 541155
Posted by Sheards Accounts
Kirklees’ Biggest Business Conference Returns

Tuesday 06 February 2018

Following on from the huge success of the 2017 Conference, the Mid Yorkshire Chamber is delighted to be hosting their 2018 Kirklees Business Conference (KBC) at John Smith’s Stadium, Huddersfield on Wednesday 21st March. The free, one-day conference has become an unmissable event in the local business calendar which is dedicated to helping businesses to connect, learn and grow. Attracting over 600 business people and 50 exhibitors, KBC includes a fantastic programme of engaging seminars, a discussion panel, surgery sessions and open networking throughout the day. This year the Mid Yorkshire Chamber is proud to announce an official partnership with Google bringing a Digital Garage to KBC as part of the seminar programme. Running alongside the four seminar sessions, more surgery sessions will also take place following their success last year. Held by local businesses located in the stadium boxes, the surgeries will provide the opportunity for companies to run their own seminars, workshops or one to ones. Rory Bourke, Events & Sponsorship Co-ordinator at the Chamber said: ”Kirklees Business Conference is definitely shaping up to be a day not to be missed. The conference is a fantastic opportunity to raise your profile, make new contacts and learn from other experienced professionals. There are many opportunities for local businesses to get involved through sponsorship, exhibiting or attending as a delegate.” Confirmed conference sponsors and partners include; AD:VENTURE, The John Smith’s Stadium, The Design Mechanics and Social Progress. Delegate tickets are free but registration is essential, significant interest is anticipated therefore early delegate booking via www.kirkleesbusinessconference.co.uk is advised to avoid disappointment. For further information about the conference follow @MYBizConfs and #KirkleesConf on twitter. To find out more about sponsoring or exhibiting at the event please email events@mycci.co.uk or call 01484 483679.
Posted by Mid Yorkshire Chamber of Commerce
Partnership deal to deliver funding for global business

Tuesday 23 January 2018

Yorkshire-based business consultancies ABL Business and Praesum Partners have agreed a partnership deal to provide a specialist commercial funding service to high worth entrepreneurs and their businesses across the globe. The new operation can fund business activities even where banks or traditional funding sources are reticent or too slow to react to a changing market and opportunities that such changes present for early adopters. The companies’ deep understanding of the commercial aspects of finance-raising, combined with a their knowledge of the issues facing family offices, trustees of family businesses, partnerships and investment companies, means they can get quick decisions for business projects. Since joining forces, the two companies have already collaborated to source commercial funding for major UK and international projects in Dublin, Monaco, Dubai and the Georgian capital, Tblisi. These range from property developments, such as hotels and luxury apartments to biotech businesses and technology innovations for export to developing countries. Andy Redman, joint Managing Director of ABL Business, said: “The proposition naturally includes funding packages for high-value assets for time-constrained entrepreneurs - items such as private jets and helicopters as well as luxury cars and yachts. Yet we are equally at home with asset financing, from car fleets to specialised plant, project finance, development finance, invoice finance, commercial property finance and straight-forward business finance. “One key distinction is that having over 120 lenders on our panel, including entrepreneurial groups of funders, means we are not reliant on one source to finance any particular transaction. Factoring lending requirements in this way means we can get to “yes” on very commercial terms in most cases presented to us”. ABL Business, based in Cleckheaton, West Yorkshire, provides asset and development finance to businesses and has been growing rapidly and expanding out across the UK since launching nearly five years ago. This new deal will take the company to the next level, enabling them to reach an affluent and influential international market. Praesum Partners, based in Wetherby, near Leeds, are advisors to HNWIs (High Net Worth Individuals) – people earning over £100,000 p/a, or having investable assets worth more than £250,000 - and Ultra HNWIs - those with assets of £20million or more. Neil Manaley, joint Managing Director of Praesum Partners, said: “Our clients and contacts have been asking us for some time to find a solution to the ever-widening “funding gap” - that is the gap between what commercial lenders will or will not do and what is then left for traditional equity providers. When it comes to raising finance, clients prefer to have all their transactions securely arranged through one dedicated advisor team who know them well and have worked closely with them to understand their specific needs”. “By joining forces with ABL we are able to bring our clients some certainty in an uncertain market, bringing direct access to commercial finance when they need it, thus providing a seamless end-to-end service”. Andy Redman added: “With access to 120 funding providers, we’ve been able to help thousands of businesses, mainly SMEs, to grow by finding them the funding they need. We’ve been extending that support across the UK through a growing network of appointed representatives who are in a position to liaise with their local business communities. “This relationship with Praesum Partners enables us to reach a completely new client group on a global level. We’re extremely excited to be sourcing funding for such major projects - some amounting to multi-million pound international developments - and helping them to come to fruition.” Photo Caption: Joint MDs Alex Beardsley, (ABL Business) Neil Manaley, (Praesum Partners) Tim Thornton (Praesum Partners) and Andy Redman (ABL Business).
Posted by ABL Business Ltd
New appointment for leading Huddersfield accountancy practice

Wednesday 29 November 2017

Huddersfield based accountancy practice, Sheards Accountants, have expanded their team with the appointment of a Senior Accountant. Zoe Lunn has joined from a small firm based in Westvale; as an AAT qualified accountant with over 10 years’ experience, Zoe will be responsible for year-end accounts and management accounts for limited company clients at Sheards. Zoe Lunn commented: “I am delighted to be joining such a reputable and well-established firm of accountants. I’m really looking forward to utilising my skills and expertise at Sheards, while working towards my ACCA qualification.” Speaking on the appointment, Kevin Winterburn - Director at Sheards Accountants, commented: “Zoe joins us at a really exciting time, having recently announced our Platinum Partnership with leading cloud accountancy provider QuickBooks UK and with a number a recent new business wins and more potential accounts in our sales pipeline. We’re really pleased to have Zoe on board and feel she is a great fit for our business to further enhance the quality and skills of our team as we continue to grow.”
Posted by Sheards Accounts
Around Town In the Huddersfield Live Hygge Tipi

Wednesday 15 November 2017

What better time to get together than Christmas? Around Town believe that connecting the business community of Huddersfield in its iconic locations and organisations is a brilliant way to share ideas, hear inspirational stories and have some FUN. Organised by Oli Smith, Michelle Crowther and Chris Buckley Around Town create memorable events every 3 months. 2018 plans are already underway; “as well as meeting at some amazing businesses we are walking Around Town in Spring - a fantastic way to get to know each other whilst experiencing some award winning locations and scenery in Huddersfield “ says Michelle And with Huddersfield Live December promises to be a memorable Around Town event. Hosted in the Hygge Tipi in St Georges Square, hear Sam Watt and Poppy Stahelin tell of the fabulous work the team at Huddersfield Live are doing and some of the stunning events planned for next year. Laura Drury sets the backdrop of how she formed the The Hygge Tipi and how it creates a convivial atmosphere for Huddersfield folk to mingle, drink mulled wine, and keep the winter night out in front of the log fire. All In the heart of Huddersfield. Tickets are limited and can be reserved FREE here. Chamber members old and new are very welcome. Around Town Events for 2018 confirmed. March 1st - Valli Opticians May 17th - Owen Scott Tailors May 25th - (Walk) Around Town - 15miles (approx) Breakfast Sarnies, The Kirklees Way, Finish in a Brewery!
Posted by The Alternative Board
Huddersfield Accountants become QuickBooks UK Platinum Partner

Wednesday 08 November 2017

Sheards Accountancy have announced that they have been made a Platinum Partner of leading cloud accountancy provider QuickBooks UK, owned by Intuit, and are currently the only Platinum Partner in Huddersfield. QuickBooks UK advanced Sheards to Platinum Partner following the firm demonstrating a commitment to training its team in the product and then quickly rolling it out to its client base – which included information events, followed by training sessions held both as groups and one-to-one. David Kay, Sales Leader at QuickBooks UK commented: “The proposal for Sheards to become a Platinum Partner of QuickBooks UK was the shortest we’ve ever experienced and was accepted unanimously; the Sheards brand, ambition, commitment and activation of their initial Quickbooks licences made it an absolute no-brainer for us to work strategically with them.” Cloud accounting solutions are becoming increasingly prevalent following the announcement of the Government led “Making Tax Digital”, an initiative which will demand that businesses submit quarterly accounting information to HMRC via a cloud book-keeping package.  QuickBooks allows businesses to keep records in real-time and store this in a cloud-based system. Allied to the efficiencies to be gained from a cloud product, with functionality such as live bank feeds, cloud book-keeping is becoming the benchmark for progressive businesses. As a Platinum Partner, Sheards can offer their clients a knowledgeable cloud solution, with the product being set up, opening balances transferred, and all the necessary training provided. Clients can either complete their own records on QuickBooks, or let Sheards manage the book-keeping function. Kevin Winterburn, Director of Sheards Accountancy commented: “We are delighted that QuickBooks UK have made us Platinum Partners. We have already seen a number of our current clients moving over to the QuickBooks system as well as new clients.” “Even though the Making Tax Digital initiative was removed from the Finance Bill due to the announcement of the General Election in June, we anticipate that the legislation will just be delayed and will be revisited very soon. Businesses should not wait though until a cloud solution is forced upon them, they should act now to get such a system in place early – they will very quickly be pleased that they did.” “We offer a tailored service to our clients’ needs as we help them move from desktop or even more traditional methods to cloud-based systems. These systems provide a huge number of benefits and therefore we are urging people to consider moving to digital regardless of the delay in legislation.”
Posted by Sheards Accounts
17 results found, page 1 of 2.  
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