General | Enterprise Finance Guarantee - EFG |  National Loan Guarantee Scheme (NLGS) |  How to find the best Invoice Discounter or Factor for your company |  Factoring/ Invoice Discounting |  Commercial Mortgages |  Leasing / Sale and Lease Back | Trade Finance and Asset Based Finance | Bank loans and Overdrafts | MBO and MBI | Trading Overseas  | Loans from Business Angels | General Debt finance also comes in many forms and the choice is usually determined by the type of security available With debt finance you retain control of your business although you may have to give personal guarantees or debentures over the business assets. Download our Whitepaper on 'Funding Options'        Enterprise Finance Guarantee - EFG The Enterprise Finance Guarantee has replaced the Small Firms Loan Guarantee Scheme which has been suspended until new Government proposals for a scheme after March 2010 have been finalised. The EFG is intended to improve the availability of working capital through the provision of term loans and the consolidation of existing overdrafts. It can also be used to support lending for business growth and development in those cases with sound propositions but which may be declined due to lack of adequate security. Please note that even with the Governments guarantee, if the borrower fails to repay the loan in full, the business remains liable for the full debt and recovery will be sought. The Guarantee is only for the Banks. Under the EFG the Government will guarantee £1.3 billion of new bank lending to viable businesses to ensure the availability of working capital and investment in the current difficult climate. The emphasis is on the word 'viable'. Start-up situations are not excluded but they will find obtaining an EFG loan very difficult. The EFG provides a Government backed guarantee against default by the borrower so that the limited number of approved lenders will be able to lend to them. The EFG provides loans from as little as £1,000 to a maximum of £1,000,000. These loans can have payback periods from 1 year to 10 years. The EFG will cover new term loans as well as existing lending such as overdrafts. Once the Bank has decided that they will support your case then they have to apply to the Department for Enterprise and Regulatory Reform (BERR) for a guarantee. You pay a premium to BERR for this Guarantee Most small businesses in the UK with an annual turnover of up to £25m are eligible Loans for most business purposes to businesses in most sectors are eligible. The principle exclusions relate to businesses in the agriculture, coal and steel sectors and to the financing of individual export orders. The BERR is not a party to the loan agreement. The contract is between you and your Bank who will set the specific terms within that agreement. 75% of the loan outstanding will be guaranteed by the BERR. The banks regard EFG loans as high risk loans. The BERR only guarantees 75% of the loan, this means that the banks can lose up to 25% of the loan value if it is not secured against any assets. This makes it more risky for them than other commercial loans where security is given. The Banks will expect the Directors of the company to have used up all available personal assets before a loan can be secured. The banks will typically charge between 2.5% and 4.5% above bank rate depending on the perceived risk involved. An arrangement fee of 1% to 2% is often charged as well. The BERR then charge 2% for providing the 75% guarantee. This at first may look expensive but is cheaper in the long run than raising equity and giving away a proportion of your company. Banks are normally only interested in your company's ability to pay back the interest and capital of the loan and that you have a viable business. So a full business plan is essential. To decide if you meet their lending criteria they will look very closely at your detailed sales strategy and forecasts and the specific assumptions that you have explained concerning your sales projections. They will look for successful proof of concept, concrete pipelines and letters of intent. They will then look in detail at your marketing plan to see if the marketing will feed the sales forecast. Above all they will look at your management team to see if it contains the right level of management and industry experience as well as the financial experience to make certain their money is safe. In other words your business plan and 3 year financial model must be one of the best they have read Click here to download the EFG Datasheet        National Loan Guarantee Scheme (NLGS) A £20bn government scheme to try to boost bank lending to small and medium-sized enterprises (SMEs) has been launched by the chancellor. Under the National Loan Guarantee Scheme (NLGS), such businesses will be able to access loans with interest rates one percentage point lower than those available outside the initiative. 5 Banks have so far signed up. Firms with an annual turnover of up to £50m will be able to participate. The discounted loans are being made available because the government is to guarantee £20bn of the banks' own borrowing, thereby allowing the lenders to borrow more cheaply than they normally do. The banks then pass on this cheaper funding to SMEs in the form of lower interest rates.        How to find the best Invoice Discounter or Factor for your company Let us find the right Invoice Discounter or Factor for you: A free service Do you have the time or the experience to survey this complex market yourself? Do you know the questions to ask and what is negotiable and what is not? Do you know which companies to go to for your special requirements and circumstances? Pegasus Funding Resources has a panel of over 44 different Factors and Invoice Discounters and have the experience and knowledge to get the best deal for you. We make no charges to you for this FREE service We know who will: Give the lowest discount rate over base Give the highest pre-payment Allow the highest level of concentration Who has the lowest service fee? The shortest contract period Who will offer single or selective invoice discounting, instead of insisting on the full ledger Who will offer invoice discounting or factoring to the IT industry. Who will consider contractual debt. Who does not ask for personal guarantees? Who has the lowest termination costs? Who will pay your existing termination costs for you? Who does not ask for a commitment fee? Who has the lowest setup/documentation fee? Who will also offer you a SFLG? Who allows additional overdraft facilities, even though they are not a bank? Who offers trade and stock finance? Who has the lowest client management ratio? Who does International Factoring or Invoice Discounting? Who has the most reliable and flexible service? Who responds the quickest? Who even takes the underwriters and credit controllers with them to client meetings? Who does not insist on debt insurance? Why should you use Pegasus Funding Resources? We know what information the funders require, we have a large panel of over 44 companies to get the best deal from, we chose the best fit, we get indicative quotations from 4-5 organisations, and then chose the best 3 to introduce to you. During the client meetings we know the right questions to ask and we negotiate the terms downwards for your benefit. We then follow up with all parties concerned until the deal is completed. Let your company benefit from our experience, let us do the work for you while you concentrate on your business and remember we offer this service free of charge. Click here to download the Invoice Discounting and Factoring datasheet.        Factoring/ Invoice Discounting Advances are made against the value of invoices, typically 80-90% and while this is not the cheapest way of raising finance it can be extremely helpful for companies with rapid growth as the security will allow higher borrowings in line with the expansion. The lender will carry out some due diligence, examining your accounts and carrying out a detailed analysis of your sales ledger history and credit control procedures. There is a spin off benefit in that it can help introduce credit control disciplines in to your business. This type of borrowing is more appropriate for manufacturers, distributors and service providers than retail and cash businesses or those allowing returns and refunds. Invoice discounting leaves the ledger in the control of the customer who collects payment and is responsible for credit control. Under a factoring arrangement control is passed to the Factor who manages all aspects of the ledger. Invoices are marked as assigned and payment is made to the factor so some businesses find this less suitable. A recent development in this marketplace is the arrival of single invoice discounters and factors. These providers offer the ability for you to just use invoice finance on one or two invoices only, without having to sign a lengthy agreement. This can be very useful when you need help to pay VAT, PAYE or corporation tax bills, as well as to help fund that large order you have just received. Click here to download the Factoring / Invoice Discounting datasheet. What is Invoice Discounting?        Commercial Mortgages This is a straightforward way of borrowing to finance the acquisition of commercial property. Buying commercial premises can be a good investment. Owning a property gives your business stability, and the property itself can become a significant asset, you may even be buying a business that is tied into the property such as a hotel, public house or café. Commercial mortgages can be used for a number of purposes such as: Constructing a new building, Moving to new premises, Expanding facilities Modifying your existing accommodation Funds of 70% and sometimes as much as 85% of the Market Value or purchase price can be advanced. The lender will often want to see three years good accounts. Higher Loan to Values (LTV's) may be achievable where you are buying as a sitting tenant. Mortgages are usually for 15 years or more and it must be remembered that the property itself is at risk if payments are not made on time. Terms might include: Fixed, variable or capped rates Flexible repayments Interest only loans with bullet repayments at the end of the term Capital repayment holidays. When the business circumstances are not standard it is possible to find lenders who will offer: Bad Credit Commercial Mortgages Self-certified Commercial Mortgages Business Start-up Mortgages Small-business Mortgages Commercial Re-mortgages Woman's Business Mortgages        Leasing / Sale and Lease Back Almost anything can be leased from cars to office equipment; in fact if it can be moved or stamped with a serial number it can be financed. The finance is quick to organise and repayment is fixed over an agreed term. There are also tax benefits to leasing. There is an endless list of assets that can be financed, from agricultural vehicles, all forms of land, sea and air transport, catering equipment, computers, software, furniture and fittings, sound systems, filming equipment, radio waves and Formula 1 motorcars to air-conditioning, radios and tills. The best rates are offered where there is a good credit rating but even without this finance can usually be arranged. It is even possible for a start up business with no trading history to secure a certain amount of asset leasing in order to fund the initial purchases of IT and office equipment. If your capital is tied up in any equipment, machinery or vehicles that your company has purchased in the past, it can be released within as short a time as one week by selling the asset to a lender and leasing it back. Sale and Leaseback is a simple and effective method of raising capital and can apply to most business assets. Capital can be made available within a few days and could even be used to reduce or remove your overdraft and other bank borrowings. No extra security is needed and fixed repayments can be spread to match your cash flows. Click here to download the Leasing and HP datasheet.        Trade Finance and Asset Based Finance There are many specialised types of finance available: Accessing Funds to Fulfill an Order: - Trade Finance provides upfront funding for confirmed orders, an ongoing supply of cash against invoices raised and then help with distribution. No matter what situation your business is in, there is a trade services solution to fit the bill. Trade Finance is essentially a pick and mix menu of solutions that you can access when required: buying goods buying goods and selling them buying, selling and moving goods If you want assistance buying goods and have a confirmed order but do not have the funds to fulfill it, the lender will provide the upfront funding to complete that order. They will pay your suppliers for you and then invoice your customers once they have received the goods. They will then refund the monies to you minus an administration fee. (Trade services solutions are tailored to each business so the fees will depend on the individuals own unique requirements but an approximate average is 5% of sales value) However, if you want assistance 'buying and selling goods, they will we provide the upfront funds to pay your supplier, but can also release up to 85% of the value of the invoices raised against those orders. And finally… if you want to buy goods, sell them and then move them - they can do this too! They provide a complete supply chain solution, marrying logistics with the finance solutions described above. Purchase order financing: - used where the inability to finance raw materials to fill orders would leave a company operating under capacity. The asset-based lender finances the purchase of raw materials, and the purchase orders are then assigned to the lender. After the orders are filled, payment is made to the lender, and the lender then deducts its cost and fees and remits the balance to the company. Stock finance: - can be used to overcome stock shortages and the stock does not have to be pre-sold. Asset based lending: - a secured business loan where assets, including stock and even brands, are offered as collateral. Access to a revolving credit facility may be provided on the total value of assets. Advances vary on the type of asset with plant and machinery commanding up to 80% and raw materials down to 30%-70%. Floor plan financing: - certain industries require significant high-priced finished goods inventory such as automobiles, refrigerators, washing machines, televisions and stereo systems. These are supplied on extended credit terms to retailers. Rather than purchase this expensive inventory outright retailers can go to a finance company for credit to purchase the inventory, secured by the product "on the floor". Click here to download the Trade Finance datasheet.        Bank Loans and Overdrafts It is generally difficult to obtain bank loans worth more than the current net worth of your business. Overdrafts are quick and simple to arrange. They provide short term borrowing but can be withdrawn at any time. Loans may be fixed term or flexible and will usually be secured by a charge over the companies assets or by Personal Guarantees from the directors.        MBO and MBI Debt is the most common source of finance for MBO and MBI using all the assets of the business to secure borrowing to the maximum levels. It is usual to see a mix of products used, including a commercial mortgage or sale and leaseback on the premises and the business assets, alongside borrowing against the debtor book and further cash release against stocks or confirmed orders.        Trading Overseas An export factoring service offers you a complete package to help you develop an overseas business profitably and with confidence. Not only does the lender provide an immediate injection of cash against the value of outstanding export invoices but then as you raise an invoice, they can release up to 80% of the value of that invoice within 24 hours. The remaining 20%, less a small service fee, is paid once the customer pays. This means a business has access to an ongoing supply of cash linked to their sales. So, as the overseas business grows so does the amount of funding available. In addition to the cash the lender provides, they also remove the hassle of dealing with overseas customers, by chasing and collecting outstanding invoice payments from overseas customers. They will prepare and send out statements and telephone the overseas customers, always communicating with them in their language. They will also collect payments and maintain professional and detailed accounts of the transactions. They can also help in smoothing out the problem of fluctuating exchange rates by offering multi currency facilities, including overseas bank accounts for fast, low cost receipt of payments. 100% credit protection is also available. Their services are tailored to each individual business so the fees will depend upon specific needs. There are two types of fee. The first is the cost of the money used, which is extremely competitive when compared with other forms of finance. The second is a service fee. Click here to download the Trade Finance datasheet.        Loans from Business Angels Business angels have for decades been the life blood of early stage companies that need funding when the banks will not consider it, in exchange for an equity stake in your company. Now business angels are entering the loan market place and have started to offer business loans to clients in competition to the banks. Unlike normal business angels, angel lenders may not be looking for a long-term investment and they may not be shareholders. A lender is looking for a superior return on his money. The system connects private lenders and business borrowers. It allows businesses to borrow directly from lenders on the network. Both sides meet online to exchange information. If the deal is right, both sides agree the rate, terms and conditions of the loan. A summary of your borrowing proposal is displayed on the system for all lenders to view. No detailed information about you or your company is displayed until a lender confirms interest in the deal, confirms his identity and registers his interest. One lender may offer the whole sum requested, or multiple lenders may contribute to the loan. You may of course reject any offer and are free to negotiate terms.
Website created by