Professional Documents
Culture Documents
This publication is intended for general guidance. Professional advice should always be sought before entering into a financial commitment and no responsibility can be accepted for any investment decision made solely on the basis of details of any scheme as summarised in this guide. Grant and loan schemes are subject to closure or to change at very short notice.
Michael Byrne
Business Venture
July 2011
CONTENTS
GRANTS Local Authority Grant Schemes Access to Work (Supporting People with Disabilities) Heritage Grants Tyseley Property Assistance Programme (Birmingham) Princes Trust Carbon Trust Craft Council Benefits and Tax Credits New Enterprise Allowance Energy Saving Trust European Funds Trade Show Access Programme Export Credit Finance Facility Grants for the Arts The Work Programme Screen West Midlands Small Business Rate Relief UnLtd (Social Enterprises) PAGE 4 4 5 5
5 6 6 6 7 7 7 8 8 8 9 9 9
LOANS Bank Loans, Overdrafts and Commercial Finance Aston Reinvestment Trust (Birmingham & Solihull) Professional & Career Development Loans Black Country Enterprise Loan Fund Black Country Reinvestment Society Cooperative & Community Finance Coventry & Warwickshire Reinvestment Trust Factoring and Invoice Discounting Future Builders England Impetus (Herefordshire/Worcestershire/Shropshire) Michelin Development Fund (North Staffordshire) North Staffordshire Risk Capital Fund Business Tax Payment Support Service The Princes Trust (18-30s) Prime Initiative (Over 50s) Royal British Legion (ex-services) Enterprise Finance Guarantees Social Enterprise Loan Fund Midlands Community Finance (MCF) (East Staffordshire) Innovation Networks Funding Circle Thin Cats Esmee Fairbairn Foundation Finance Fund (Social Enterprises) Leadership and Management Funding 10 10 11 11 11 12 12 12 13 13 13 14 14 14 15 15 15 16 16 16 17 17 18 18
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EQUITY Advantage Business Angels Exceed (Midlands Advantage Fund) Creative Advantage Fund (Arts/Media/Design) Venture Capital Early Advantage Fund Advantage Enterprise and Innovation Fund Adventure Capital Fund Bridges Ventures (Social Enterprises) Private Investors (Business Angels) Investor Networks Coalfields Funds Connect Midlands Enterprise Capital Funds Mercia Technology Seed Fund UK Steel Enterprise Invstbx Islamic Finance SUMMARY 19 19 20 20 21 21 21 21 22 22 23 23 23 24 24 25 25
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Preface
The aim of this guide is to provide a summary of and contact details for commonly used sources of business finance for small businesses. It is an overview of those that are most frequently of use to people starting or developing a business or a social enterprise in Birmingham and the West Midlands. In 2011 it is more important than ever to; Know how much you really need to start or develop a business Recognise that you will need to invest your own money in your business if you can, before you can raise significant finance from others. Appreciate that your business must be sustainable to raise finance This guide is compiled from information in the public domain. Schemes are subject to change at short notice. Databases of sources of finance are available via the internet through www.westmidlandsfinance.com and
www.businesslink.gov.uk
Most grants and loans are restricted in some way to; limited geographical areas, particular communities, specific business sectors, or particular business activities. Grants are only available in cases of need, and for start-ups are limited to certain types of business such as those in the creative sector or social enterprises. The fact is that a commercial business or social enterprise can only raise external finance if it has a business plan with logical financial forecasts that justify grant aid, show they can repay a loan or can reward equity finance with future income.
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Michael Byrne
GRANTS
(FINANCIAL SUPPORT THAT DOES NOT HAVE TO BE REPAID)
July 2011
Contact a Disability Work Adviser at a local JobCentre Plus in the first instance. There is a contact centre for Access to Work in the West Midlands and the telephone number is 02920 423291 or text phone 02920 644886 or visit www.jobcentreplus.gov.uk
Heritage Grants
The Heritage Lottery Fund makes available grants for projects that conserve or enhance the UKs heritage, increase participation, access or enjoyment of heritage. Applicants must be not-for-profit organisations, and the minimum grant is 50,000 Visit www.hlf.org.uk or call 0207 591 6000
This scheme provides financial assistance to SMEs in the Tyseley Environmental Enterprise District in Birmingham to improve industrial premises to meet modern business needs, and create new employment. This can include new building work or extensions of manufacturing premises, internal refurbishment, land clearance and reclamation. Grants of up to 100,000 or 50% of costs are available in the grant area. It is not available to retail outlets or project costing less than 20,000 Contact the Tyseley ERDF Regeneration Manager on 0121 303 3692
The Princes Trust
The Princes Trust is a nationwide charity that helps disadvantaged young people (Aged 18 to 30) in many ways. The trust concentrates its business support for young unemployed people through loans to help start a business (see page 20). However, they can offer Test Marketing Grants of 250 prior to start-up. Contact 0121 689 6898 or visit www.princes-trust.org.uk
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Please consult www.thecarbontrust.co.uk for more details, or call 0800 085 2005
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www.energysavingtrust.co.uk
European Funds
European funding is provided through the European Commission to help businesses across Europe. To apply for European funding you do not always have to apply to Brussels or Strasburg, as in many cases schemes and programmes are administered by the UK government or another intermediary like a bank, agency or local authority. European funding is often restricted to small or medium sized enterprise (SME) that employ less than 250 employees and have a turnover of less than 36million. Support is restricted to areas of greatest need. The West Midlands is designated an area of Objective 2 assistance. (2nd highest level) The European Investment Bank provides loans to SMEs at less than market rates of interest. These cannot exceed 50% of the investment cost, and must be at least 15,000. The European Investment Fund provides funds for venture capital aimed at new innovative technology companies. This is known as the ETF Startup scheme. The European Union provides grants to support (SME) companies with projects to develop new products or processes. The project must involve co-operation between at least two countries. Grants are generally 50% of costs of major risky and innovative technological advances in industry or commerce. Details are available from the European Programme Information Centre on tel. 0247 623 6284 or visit www.epi-centre.org.uk. There are many restrictions on who can apply for European funds. For more information see the business link web-site www.businesslink.gov.uk, which gives guidance about the types of support available. In addition there is a European Information Centre (EIC) details of which are on www.euro-info.org.uk
July 2011
The Work Programme is delivered for Jobcentre Plus by specialist organisations, called providers. The provider will give support to people who have been claiming jobseekers allowance for 12 months to find work or in some cases start a business. The Work Programme may include you taking part in activities like work experience, training and further support. The support will be tailored to individual needs and circumstances. Involvement in the Work Programme will last up to two years. The Work Programme is mandatory if you have been getting Jobseekers Allowance for 9 months if youre aged 18 to 24, or 12 months if youre 25 or over. If you are getting Employment and Support Allowance you may have to take part from three months before the date your doctor expects you to be fit for work unless you are a full-time carer or a lone parent with a child under five. If you have to take part in the Work Programme, Jobcentre Plus will write and ask you to attend an interview. For more information see www.direct.gov.uk
July 2011
Digital media projects Feature film and short film development Running film festivals Broadcast projects Educational or archive projects
UnLtd
UnLtd provides practical and financial support to social entrepreneurs in the UK. Support is packaged as an award in two levels funded by the Millennium Commission. Only individuals, not organisations are supported. Level 1 awards can be between 500 and 5000. These are designed to help get ideas off the ground that will improve peoples lives in disadvantaged communities.
July 2011
Level 2 awards can be between 10,000 and 20,000. These are designed to support the development of projects that benefit the community. For more information visit www.unltd.org.uk or call 0121 766 4570.
LOANS
(MUST BE REPAID OVER AN AGREED TIME WITH INTEREST)
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The borrower must become a member of ART. Loans are generally made to businesses selling to other businesses.
The application process begins with a telephone discussion of the loan proposal.
The fund will examine the business plan of any viable small business in the area that cannot raise all the finance it needs to start or expand from commercial sources. Call 07875 199254 or 07875 199262 or visit www.bcelf.org
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Impetus (Rural)
Impetus is a Community Development Finance Institution within the Marches Rural Reinvestment Trust. It supports access to finance for businesses in the rural communities of the Marches, covering Herefordshire, Worcestershire and Shropshire Business loans of 1,000 to 50,000 can be made to individuals or organisations, and these are repayable over a period of up to five years. Applicants must live and work in the target area, prepare a business plan and take advantage of business support. Borrowers must have tried to use commercial sources of finance to meet their needs. Visit www.impetus-marches.co.uk or call 01386 556000
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made on commercial terms and the borrower pays a premium of 2% interest, and an arrangement fee. For more information visit www.businesslink.gov.uk or approach a bank directly.
Innovation Networks
A grant is available to networks of three or more SMEs that are innovating new products, processes or services that will provide benefits to the West Midlands economy. The grant is up to 10,000 and must be matched by the applicant. It can be used to part fund any development costs. For more information contact Coventry University Enterprise Ltd on 0247 623 6391 or visit www.2wm.co.uk/innovation-networks.
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Funding Circle business loans are 5,000 to 50,000 for 1 or 3 years at a fixed rate of interest. Visit www.fundingcircle.com
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To be considered Borrowers must be a limited company based in the UK, have been established for several years with a good credit history and have a viable plan which demonstrates ability to repay the loan and interest in regular monthly instalments and be able to provide acceptable security that reduces the risks for lenders. Visit www.thincats.com
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Contact
30k to 3m over periods ranging from 6 months to 10 years at competitive rates to develop their business
EQUITY
(RISK INVESTMENT FOR A SHARE OF FUTURE PROFITS)
Exceed (Midlands Advantage Fund) supports growing businesses across the West Midlands region. The 18 million fund is a joint investment by Lloyds Development Capital (LDC), Advantage West Midlands and the European Regional Development Fund (ERDF) and managed by Midven Ltd in Birmingham. The fund can invest between 250,000 and 750,000 into small and medium sized enterprises across a range of sectors. Companies must meet the following criteria:
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Located within the West Midlands or moving there shortly after investment. Be a micro, small or medium sized enterprise. Have growth potential, capable of returning a significant multiple of the funds investment in three to seven years either by a trade sale or flotation. Not operating in sectors excluded by European State Aid restrictions.
Venture Capital
Venture capital is normally only available to companies seeking large amounts of capital, usually over 1 million. It involves selling shares in a company to a financial institution which usually also takes a seat on the board. The original owner managers often reserve the right to buy back the shares in the future. The British Venture Capital Association is the representative body for the UK Venture Capital Industry. They publish material for those looking to raise venture capital.
The 8m Early Advantage Fund provides investment for small businesses within the West Midlands region. The fund can make an initial investment of up to 125,000 if matched by private money, and can invest a further 275,000 in later rounds.
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The fund is open to high growth start up, early-stage and medium-sized enterprises with or without revenues. Eligible companies will initially be raising investment of up to 500,000. The fund is part of the Solutions for Business range of publicly funded finance programmes and managed by Midven Ltd on behalf of Advantage West Midlands and further information can be found on www.midven.co.uk or by calling 0121 710 1990.
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Bridges Ventures
This is a major community development venture fund that can buy shares in community enterprises with high growth potential. The fund looks for investment opportunities including early stage expansion finance and management buy-outs. The fund invests only in those districts that are considered by the index of multiple deprivations to be the most disadvantaged areas of England. It is advisable to check if the area of the West Midlands in question is included via the Bridges Ventures website. It invests in projects that bring strong social benefits in health, education and the environment. Contact www.bridgesventures.com or call 0207 262 5566.
Investor Networks
Beer & Partners Beer & Partners is a venture capital firm that seeks to close the equity gap between family capital and financial institutions. They provide a wide range of services for businesses seeking investment including advice on funding strategy and discreet exposure to a large register of investors and other contacts, and its website. They organise Investment Fairs, where companies can meet 100 to 150 investors face to face, regularly around the country. These are restricted to 30 clients. They can introduce investors directly.
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The Central England Business Angels service is free at the point of entry. Every company accepted into the Central England Business Angels funding process receives an individual, bespoke service. Assistance where needed will be given to investors and entrepreneurs. Central England Business Angels works in collaboration with other networks and organisations. Upon registering, both investor and entrepreneur can request access to a library of useful information. Central England Business Angels specialises in businesses seeking less than 250,000 but has the capacity to raise 500,000. Central England Business Angels welcomes investors looking to make tax-efficient investment in SME's based in Central England. These businesses are vetted and presented in an investor ready form with information enabling the investor to make an early decision in principle. Details of the SME will be available on the website so that investors can make investments either as individuals or in a group Contact CEBA on 0845 051 3850 or visit www.centralenglandbusinessangels.com or email info@cebangels.com Minerva Minerva raises finance from suitable banks, venture capital funds and the investors of Minerva Business Angel Network. They help established businesses raise investment for expansion, and emerging businesses to find funding for start-up and growth. Several client companies are now stock market listed. The Minerva Access to Finance programme, launched 1994, is one of a portfolio of services provided by University of Warwick Science Park Limited For more information contact www.minerva.uk.net or call 0204 7632 3114 or email capital@uwap.co.uk
Coalfields Funds
Coalfields Funds provide finance for growth orientated companies and entrepreneurs in former coalfield areas, or businesses that employ people a significant proportion of their workforce from designated former coalfield areas. It is open to businesses at any stage of development from start-up to buy-out, and the fund can also give business advice and guidance. The fund can offer finance in the form of equity or equity related funding from a minimum of 40,000 up to a maximum of 1milliom. This finance may not exceed 50 per cent of the total funding requirement. Visit www.coalfieldsfunds.co.uk or for further information call 0870 766 8238
Connect Midlands
Connect Midlands is a not for profit network linking high-potential technology businesses and entrepreneurs with business training, and access to finance. Its
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specific aim is to help early stage companies to secure equity based finance of up to 5 million through a programme of events and training. For more information visit www.connectmidlands.co.uk or call 0247 632 3320
Catapult Growth Fund supporting innovation by early-stage businesses. Dawn Capital Fund investing in technology-driven companies creating new markets. Carbon Trust Venture Capital can invest up to 2million in companies developing low carbon technology For more information visit www.bis.gov.uk or call 0207 215 5000.
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* Environmental * Information & Communication Technologies * Transport For more information visit www.merciafund.co.uk or contact West Midlands Enterprise on 0121 236 8855
UK Steel Enterprise
A wholly owned subsidiary of Corus (Tata Steel), UK Steel Enterprise provides financial and other support to new businesses in areas that formerly depended on steel manufacturing for the generation of jobs. With the closure of steelworks, there have been many former steelworkers who now consider self-employment as an option. UKSE can help any small business in former steel-making areas. Applicants must provide a sound business plan and be based in, or are relocating to, a steel industry operating area. Equity and/or loan finance is available for start-ups, expansions, acquisitions and buy-outs across many business sectors including manufacturing and service related. Share capital and share/loan packages are available up to 750,000 on terms individually negotiated for each investment. Small loans are generally unsecured. Secured loans are available up to 750,000. For more information visit www.uksteelenterprise.co.uk or call 0114 270 0933.
Investbx
Serving the West Midlands region, Investbx is the first virtual trading platform of its kind in Britain. Its purpose is to help small to medium businesses raise capital for growth, in exchange for shares. Unlike traditional markets, Investbx raises funds for equity on behalf of applicant companies. Investbx develops a partnership with companies, investors and advisers. From the outset, each company will work with Investbx to assess whether it is appropriate fro them. The process of issuing shares in return for equity has been streamlined and all the documents required to join Investbx and raise equity will be completed by the company and its advisers using an extranet facility. An admission document will be available to potential investors through the Investbx website. Investors will be able to apply for new issue shares directly online, or via financial intermediaries. Investbx uses an online auction-driven platform as a market for shares of small and medium sized companies. An auction-driven platform is widely recognised to be a more appropriate mechanism for trading of stocks in smaller companies, matching buyers and sellers at a single price. For more information visit www.investbx.com or call 0121 233 4903
Islamic Finance
Under Sharia or Islamic law, making money from money, such as charging interest, is usury and therefore not permitted. Wealth should be generated only
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through legitimate trade and investment in assets, and investment in companies involved with alcohol, gambling, tobacco and pornography is strictly off limits. The Islamic financial model works on the basis of risk sharing. The customer and the bank share the risk of any investment on agreed terms, and divide any profits between them. Nearly all the traditional retail banking services expected from established High Street banks are available in a Sharia compliant format. The Islamic Bank of Britain www.islamic-bank.com offers a Sharia compliant current account, mortgage and even personal loan. HSBC www.hsbc.co.uk offers an Islamic current account and mortgage. A handful of other banks - including some of the biggest international names and the Middle East's biggest traditional banks also offer financial products in the UK tailored for Muslim entrepreneurs.
SUMMARY
Many people rely on their OWN FUNDS, or friends and family, to develop a business. For others, this is not enough to finance high start-up or development costs. The main providers of external business finance remain high street BANKS, but there are schemes and organisations that help self-employed people, social enterprises and companies excluded from commercial finance. These may offer grants or loans, subject to specific criteria. Some businesses can consider the risk finance or equity option. This guide has been designed specifically to provide simple information and contact details for the use of SMALL AND START-UP BUSINESSES and their advisers. Although it is updated during the year, please note that schemes in this guide may run out of funds very quickly and cease to operate. In 2011 Government efforts to reduce the BUDGET DEFICIT by cutting public expenditure are likely to reduce funding for business support or business finance projects. Grants will become significantly more exceptional. For self-employed people whose business debts are creating a real problem, the services of BUSINESS DEBTLINE are free, independent and confidential. Part of the Money Advice Trust, their experienced staff can help with advice on dealing with creditors and how to decide which debts take priority for settlement. Their telephone number is 0800 197 6026 A business owner should only decide to take up a loan, grant or investment after very careful consideration. A discussion with an experienced business adviser can help identify the best funding solution in the long-term interests of the business. Many small businesses fail because they are under financed. Some take on a burden of too much borrowing. It is essential to prepare a full BUSINESS PLAN with detailed financial projections of future sales, expenses and profits, and a comprehensive marketing strategy, before applying for finance. Business planning increases the chances of business survival.
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Michael Byrne
Senior Business Adviser Business Venture Birmingham Chamber of Commerce
m.byrne@birmingham-chamber.com Business Venture, Birmingham Chamber of Commerce and Industry, 75 Harborne Road, Edgbaston, Birmingham B15 3DH.
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