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Management teams can give up hope of a buyout before it develops into anything but a tearoom discussion. The reason? The belief there are insufficient funds for the MBO to move forward. This is a common misconception, however.

While it can be true that the collective financial clout of a management team is not enough to fund a buyout by itself, the vast majority of buyouts move forward with third party backing anyway. Banks and independent lenders are obvious candidates. Vendor deferred consideration is also possible to reduce the initial payment.

MBOs typically require 3-6 months to complete. The process is a legal minefield but so common that it is structured and, in most cases, hassle-free. If you are considering a buyout, we will cover two of the best ways to fund it below.

  1. Management buyout loans

A management buyout loan is a term loan with fixed repayments. You borrow the funds needed for the buyout, typically over 1 to 5 years. Funding your MBO in this way gives you financial certainty with regular repayments.

The only limitation of a management buyout loan is yourself, and other buyers if at all applicable. Lenders will look into your credit history to assess your creditworthiness and the same goes for other buyout participants. A weak link here can scupper the chances of a loan although one person with poor credit is not a deal-breaker.

The lender will also look into how much each of you is investing. If they see your management team putting up over 70 per cent of the funding, they will see funding the remaining 30 per cent as lower risk.

It is important to note that buyout loans of less than £50k are typically unsecured. This is because security is provided by way of your own investment and company profile. If you are in need of funds up to £50k, funding your MBO this way is affordable. If you need more than £50k, you may need to offer security to get funds.

  1. Asset-backed loans (leveraged buy-out)

If borrowing based on personal circumstance is not ideal for you, consider an asset-backed loan instead. Buyouts that go forward through such funding are called ‘leveraged buy-outs’ because they use company assets as leverage.

This is not the same as raising capital through refinancing. With an asset-backed loan, a lender looks at the bigger picture of a company and lends based on the company’s balance sheet instead of your own creditworthiness. If the company is healthy and shows capability of repayment, the asset-backed loan can be approved.

A leverage buyout model has a few advantages to the buyer. The main advantage is a return on equity. You use the loan to cover part of the purchase price. Leveraging the seller’s assets to get that loan increases returns.

Although this type of funding is not suitable for every situation, it is highly flexible long-term. As the business grows, you can borrow more against assets for additional working capital. This can unlock more funding than a traditional loan.

Buying assets for your business is a balancing act – on one had you want to retain as much cash in your business as possible but on the other you need to keep costs low so what things make business car finance an attractive proposition?

What types of finance are available?

There are many types of finance that might fit the bill when you are looking to buy a new car for your business.

The one that everyone thinks about is a car lease. This form of finance is probably the most traditional for businesses and there are a myriad of companies offering these products.

A car lease will usually be offered on new or relatively new vehicles and comes in two forms; an operating lease or a finance lease. In the first form you basically rent a vehicle for a period then at the end you hand the vehicle back. There may be charges for damage or high mileage.

A finance lease works a little like a loan in that you rent the vehicle for a period but at the end you have the option to purchase (OPT). Sometimes this will be for a nominal payment and sometimes there will be a hefty balloon payment.

Another type of finance is a simple term loan. This is likely to be the product offered by your high street bank and will be an amount borrowed over a term with no final payment. Because you use the money to buy a vehicle outright, the business owns it and there are no final payments for wear or mileage.

Manufacturers will often offer Contract Purchase to potential buyers. This works in a similar way to a finance lease in that the company is paying to use the vehicle and at the end of the contract can hand the vehicle back or pay a final payment (often half the value of the vehicle) and retain the asset.

What type is best?

This is unfortunately a ‘piece of string’ question.

The best type of finance depends very heavily on the type of business you are in, how much mileage you expect to do and your attitude to rental versus owning.

The tax treatment of the purchase will also have a bearing and you really need to speak with your accountant to understand your situation.

In general terms though payments you make on finance where you don’t own the vehicle will be tax allowable. For payments that include an interest element, but you own the vehicle then only the interest portion can be offset against tax.

For companies doing very high mileages then outright purchase will probably be the best option whilst contract purchase may be better if cash is at a premium as the payments will be lower but there will be a high mileage charge at the end.

Next steps

With so many different types of finance on offer it pays to take expert advice. Look for business finance specialist who are independent and can give advice on what business car finance products are best for your company.

For many people the idea of owning their own pub or bar is the dream job but of course real life must intrude and there’s the tricky matter of arranging the finance to enable your purchase.

There are of course a variety of different methods of owning pubs from the town centre leasehold bar to the tenanted local in the suburbs to the freehold, free of tie country pub and each has its own financing needs.

Possibly the most identifiable to new landlords is the freehold property. Here you own the land and buildings in the same way as you own your own mortgaged house. In this case the purchase price is likely to be much higher than the tenanted pub but will have significant assets that a business mortgage can be secured upon.

Ideally, you’ll be looking for a business mortgage specialist who will be able to advance a high Loan to Value (LTV) allowing you to retain cash for working capital.

Tenanted pubs are a different proposition as the landlord buys only a lease whilst the building will be usually owned by a pubco. In this case there will be a small amount of assets in the shape of fixtures and fittings but in general the new landlord is buying intangible assets such as goodwill.

As a borrower there a couple of things that you’ll be wanting to look for. The first is a specialist financier that will advance against the fixtures and fittings often on a lease basis. This means you pay a small monthly or quarterly rental rather than having to find the full cost upfront.

Secondly, it’s a good idea to find a lender who will consider a loan for working capital and any ingoing costs. Sometimes this will be a business loan and sometimes a personal advance but in either case these will provide the business owner with the cash to cover the purchase and any initial working capital and refurbishment costs.

With tenanted operations it can often be the case that attractive options come up at very short notice. In these instances, the quickest buyer to be able to hand over the cash can frequently get the best deals.

Buyers will need to look for a lender who is able to move from initial application to pay out very quickly indeed and in these cases, it is usually best to look for a specialist. Having someone considering an application who understands the licenced trade and can make decisions based on the facts rather than trying to fit into a rigid set of decision criteria will make all the difference.

Naturally the overarching consideration will be a lender who is able to offer market leading rates and reasonable repayment periods. It is also sensible to find a lender who is able to give flexible payment terms especially if the pub you are looking at experiences significant seasonal variations in income.

Buying a pub is an exciting time and choosing the right loan, with the right lender is key to ensuring that your new business gets off to a great start.

There are several emerging markets which are ideal for up and coming entrepreneurs to begin their business. With the aid of startup loans a company can develop and expand into a profitable enterprise. Here are three of the current best new sectors that should be considered by would-be business owners:

Cryptocurrency and blockchain development

Last year the popularity of cryptocurrency skyrocketed, along with the values of the more popular coins Bitcoin and Ethereum. Although it could be dismissed as investing real world money into “imaginary” cyber currency, the value of blockchain wallet coins has grown to the point where it is now a billion dollar market. Demand for experts in cryptocurrency development far outstrips the available talent. Cryptocurrency developer is now one of the fastest growing jobs, guaranteed to have hiring potential. So it is a very opportunistic time to take out a startup finance loan for creating a business that answers the high demand for these services.

Drone development

UAVs were once the domain of the military and niche novelty markets. Now however, they have expanded with newer, more varied and cheaper models. Drones have a vast number of applications within practically every sector.

The ability to capture and record images of vast aerial terrain allows drones to be of use within the construction, delivery, telecommunications and transportation industries, as well as the emergency services.

They are already being utilised by police forces, archaeological excavators and even the food service industry. Their utility as a vehicle is constantly expanding and therefore should be of great interest to anyone hoping to create their own business.

3D printer technology

3D printing technology has now advanced to the point where synthetic and biological samples can be shaped into models designed from a computer. This has great application potential for bio-medical industries. Taking out a loan for a business that focuses on the research and development of new 3D printing advancements is a smart choice for investment. As well as medicine, the technology also has potential applications in general manufacturing, fashion, automotives, space and robotics. It is a fast growing technology with plenty of opportunities for startup companies.

If you have had a negative business loan response from your bank, then you may be feeling down. After all, they are your business bank and you may feel that you could have expected a little loyalty from them.

Don’t be down for too long though. The fact is that you’re in a pretty big club, as a huge number of companies, small and large, have been turned down for business finance despite the cuddly marketing and promises to central government.

You shouldn’t lose heart. There’s a wealth of lenders out there who specialise in business funding and finding the right finance for your company could be closer than you think.

Independent lenders

Although it’s true that the first port of call for many businesses would be one of the big high street banks, going for an independent lender can be a very attractive option.

One of the key benefits is the sheer flexibility of the lending criteria. Big organisations have rules and if companies don’t fit into the ready-made mould then getting money when it’s needed is always difficult, sometimes even for big business.

In contrast, independent and specialist lenders are used to dealing with all sorts of companies and understand that not every business conforms to a set of rigid criteria. The fact that a business might be different in some way, for example, would usually affect some other aspects of a loan decision with a bank.

A swift yes or no answer

The next characteristic of the decision process is the time it takes to move through and get that yes or no answer. If you have a company that has banked with one bank for several years, then you may be in luck with your high street bank. If you fall outside of this frame, then you’ll often find that even if you aren’t rejected out of hand then your application will be referred to a credit committee for a decision.

Independent lenders understand starts-ups, growing SME’s, investment in projects and even VAT and tax bill lending. Because they are used to seeing business problems on a day to day basis, which means they will take time to understand the company, the need for finance and then work out how they can help. A quick out of hand ‘no’ is a rarity indeed!

Business funders tend to do one thing – lend money, it’s in their interest to get a decision made and cash transferred to the borrower as soon as they possibly can. Consequently, it is often the case that going to specialist business funders is much quicker than other options,

One further benefit of looking at specialist lenders is their approach to repayment terms. Whilst the more traditional loan sees regular monthly payments made over the term of the loan, that method may not suit all companies especially where the money is for a start-up or medium-term project. Looking for different payment terms such as quarterly payments, payment holidays or deferred interest is a worthwhile option for the cash poor company.

Whether the economic climate is good or bad, it is always a challenge for startups and small-medium sized businesses to find the funds to start.

Without assets or valuable securities, founders can have a tough time securing a good loan. So before writing your application, there are some important tips to take on board.

Have a coherent and detailed business plan

The foundation of every successful business is a business blueprint. Without a well thought out business plan, investors struggle to achieve their goals. Further down the business timeline, founders should review their business plans as it will set the course of the business for several years.

In order to secure adequate startup funds from creditors, it’s imperative to show them a detailed business plan, showcasing the opportunities you’ve identified in the marketplace that will have them see significant returns. Also, do not underestimate the importance of measurable goals within the business plan that potential investors/lenders can get behind.

Seek advice from a mentor or experienced investors

Seek financial advice from experienced and knowledgeable investors locally. They may be able to point you in the direction of where or how they secured funds to start their enterprises. Aside from just advising you on securing funding, experienced investors can also be a wealth of information and offer resources to assist your endeavour in business.

Keep a good credit score

It’s fairly easy to see the benefits of keeping a good credit score. Banks and lenders are more likely to lend you enough funds to start your business and you could potentially secure a loan with lower interest rates and better terms.

If you currently have a bad credit rating, consider repairing it before approaching lenders and financial institutions for a business loan. Reducing the amount of debt you owe can work wonders on your credit rating. Making sure to pay your credit card payments and bills on time will also help improve your credit rating further.

Networking

Professional networking with business-minded and successful individuals will prove invaluable both in mapping your business endeavours and in acquiring funds to start your business. The strong relationships you establish in the early days of your venture will also help you further down the line as your business evolves.

If you’d like to speak to someone about securing quick and easy startup finance for your business, get in touch with us at NCF.

Every small business owner dreads the prospect of a tax bill surprise. But there are ways to avoid this scenario – mainly by staying prepared and organised! Let’s take a look at some best-practice tips for small business owners.

1. Keep up to date

Small business owners will be subject to different types of tax, such as corporation tax and VAT. Other forms of local tax may also apply, such as business rates. Because these can change in each financial year, it’s vital to know how any changes will affect your bottom line. Follow the government’s budget announcements and read the business press to stay up to date.

2. Use an accountant

A small business accountant will help to ensure that you are paying the right tax and minimising any legal deductions. Small business accountants are often highly cost-effective and can pay for themselves by helping to identify your full allocation of allowable deductions.

3. Start saving

Put away a sum of money every month into a linked business savings account and make sure it is sufficient to cover your anticipated tax bills. This will avoid you from being hit with a large annual bill that over-stretches you and depletes your reserves. Remember, access to finance is a vital aspect of maintaining a healthy approach to business risk, allowing you to ride out any unexpected costs and to take advantage of surprise opportunities which require investment.

4. Have a plan B

New businesses, in particular, may find that they are hit with a tax bill when they least expect it. Remember that you can access specialist business loans, such as VAT loans for businesses, to help you to meet these costs in the short-term. A business loan will give you the breathing space that you need to pay the bill and avoid racking up charges. Just make sure you then stick to the repayment plan and factor it in to your finances.

5. Stay organised

The cornerstone of good business financial management involves staying on top of your finances. Keep thorough records in a format that HMRC recognises and follow good financial practices to ensure that bookkeeping can be carried out in a correct, timely fashion throughout the business year.

If you are in need of HMRC finance or a VAT loan, give us a call today and speak top one of our helpful funding managers.

If you’re looking to take out a small business loan then your business finance is going to be taking up a lot of time in your mind right now. Whether you’re fired up about your startup and need some funds or you’re a small business veteran and want some funding to take your business to the next level, at Nationwide Corporate Finance we can’t wait to help you get going. Business finance can be daunting and complex but we want to make it as simple and hassle-free as possible for you. We’ve put together some handy tools for managing your business finance that should save you time and hopefully some money too!

Online banking

Online banking is a lifesaver for small business owners. No more running to the bank just before five to get a statement, you can get all of your financial information in a couple of clicks. Most, if not all, high street banks have mobile apps now so you can check your finances from your pocket. It’s also great for setting up standing orders, paying bills and monitoring loan repayments. No matter how internet savvy you are, online banking is a must-have for entrepreneurs.

Cloud accounting software

There are loads of different providers of online accounting software, like QuickBooks, Xero and Kashflow, it’s important to have a look at what each one offers and whether your business can afford it. Using an online accounting platform means you can use it from anywhere. You don’t need your specific laptop, you can log in from anywhere in the world and make sure your books are balanced. They all offer some really handy tools like payroll and invoicing, and the cloud means that if your computer breaks you don’t need to panic, everything’s backed up for you.

Quick business finance

Sometimes business moves really quickly, and if you need funds to move forward with a project you don’t want to be waiting until the bank opens on Monday morning to go ahead. At Nationwide Corporate Finance we understand this and you can contact us seven days a week and apply for business finance online with a simple form. We can put funds into accounts that qualify within 24 hours so there’s no need to wait around. We know you’re busy running your business so our simple process and super fast service are perfect for helping you manage your small business finance.

The thrill of starting up your own business is undeniable – but the learning curve can be extremely high! Here are some top tips to help you get to grips with your finances.

1. Stay on top of your bookkeeping

It’s very easy to put off the task of bookkeeping, especially if finance and accounting aren’t your passion. However, it is essential that you get a robust system in place from the start. Either get an accountant or bite the bullet and undergo training designed for small business owners. If you can break the bookkeeping activity down into manageable categories – invoices, expenses, wages and so forth – you’ll rapidly find it becomes easier. Just avoid procrastinating or the issue will snowball!

2. Build up a cash reserve

A cash buffer will help to minimise business risk when those unexpected bills inevitably come along. It will give you peace of mind that you can handle any emerging opportunities and also respond to any threats – whether those are the chance to buy some much-needed stock at a discount or to deal with an unexpectedly large tax bill! Make sure you build one up and then preserve it.

3. Know your seasonal cash flow pattern

It’s vital to work out what your seasonal cash flow is in order to ascertain how much of a financial cushion you’ll need to build up, and whether your projections are on track. Most businesses will have seasonal spikes and periods where conversions are particularly difficult.

4. Know your sales cycle

Some B2C businesses will have an instant sales cycle if they operate online in an FMCG space. Other B2B organisations can have complex sales cycles that require several years of investment. Know this to help plan your cash buffer for the leaner times and to shape your business activities accordingly.

5. Don’t reinvent the wheel

When funds are tight in the early days, it’s tempting to try to do everything yourself rather than spend on external services. But by attempting to reinvent the wheel at every point, your time and focus will become diluted and you will be unable to focus on strategic concerns. Invest in vital business software such as cloud computing services, remote PAs, small business accountants and other solutions that help you to run your business efficiently and cost-effectively.

6. Find the right business finance lender

A good business lender can be a real asset when you need to rapidly access cash. We offer everything from startup finance to VAT loans for businesses of all sizes, and at attractive terms. Our customers view us as a partner to their business whenever they need to access the business loans they rely on to thrive and grow. Contact us to find out more.

When you start a new business there is an incredibly steep learning and delivery curve to navigate, an intensive period of change and development and plenty of challenges along the way.

Finance is always a challenge for startups and a healthy cash flow can often spell the difference between success or difficulty, especially when other finance routes such as angel investment have not been secured.

So how can startup finance help you to successfully navigate that all-important first year?

Breathing space

When you have startup finance in place, it takes away the stress of needing to find cash to finance your operation in the short-term and allows you to focus on your strategic goals until you start to turn a profit.

Liquidity

Most startups will have a healthy enough cash reserve which allows them to manage risk and to have a safety net in place. A business loan allows this cash reserve to remain in place and a healthy degree of liquidity to remain.

Startup costs

Many startups need to invest heavily at the start of their business, particularly if they need to develop new solutions or technologies, invest in infrastructure, train staff or take on new business premises. Aspects such as initial stock orders, website builds, marketing campaigns and so forth can require a hefty chunk of financing – and the right startup loan can help to overcome this barrier.

Opportunity

Other startups see an early opportunity to enjoy a competitive advantage by rapidly navigating into a market segment in which they feel they can add better value. This will often require the creation of an innovative new solution – of course, requiring expense! A business loan can allow this opportunity to be taken with both hands.

Nasty surprises!

Whether it’s a larger-than-expected VAT bill or business rates, rising import costs due to the changing price of sterling, higher than budgeted software licence cost or unanticipated recruitment drive, costs always arise in that first year of business that cannot always be budgeted for. Forget expensive overdrafts – a competitive business loan at favourable terms will allow you to plan, budget ahead and provide the finance that you need to embrace opportunities and overcome challenges as your new startup grows and starts to experience success.

Contact us now to find out more!

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