News

There are a number of options available to fund business growth but many factors, including not wanting to give away part of your business in equity, not having several years of trading under your belt, wanting to invest in a new product, or not having enough security to satisfy a lender, can leave many businesses unable to access the finance they need in order to grow.

As appointed Fund Manager for a number of funds in the East and South East of England that exist to promote business growth, FSE is helping ambitious SMEs (small and medium enterprises) overcome such hurdles, providing loans from £100,000 to £500,000.

FSE’s Head of Funds for the South East and East, Cheryl Weeks, explains how FSE is debunking lending stereotypes to provide more than money and help high-growth businesses reach their potential.

Lenders want to see at least three years strong trading history…

As a provider of finance for business expansion, we’re more interested in your forecasts than your historic trading performance. As long as you can show that your business is growing and has gained commercial traction such as some sales, confirmed orders etc, we don’t mind if it is early stage, resurgent, recently changed ownership, or pivoting in a new direction.

Where mainstream finance providers will look for evidence that past performance can service your borrowings, we’re interested in the opportunity you are seeking to take tomorrow and not yesterday’s profit. We’re open to taking the time to explore the opportunity so, even if you’ve been unable to access funding before, come and talk to us.

The computer says no…

We aren’t about ticking boxes for a computer algorithm to make a lending decision. We want to get to know you; we’re interested in the challenges you’ve overcome, the bumps in the road, and your ambitions. We want to hear your business story to date and understand the opportunity you are seeking to fund. Yes, we undertake desktop research to complement the information you provide to us but fundamentally our appraisal process is personal; no computer-generated responses.

Bank managers are a thing of the past…

We’ll provide you with a dedicated Investment Manager who will work with you to present the best possible case to get your funding over the line. Complexity in the transaction is likely to be a given in many of our deals and our team are well-qualified to deal with this. They’ll meet with you as much as it takes to fully understand the proposal and will help ensure it’s in the best shape possible before being reviewed by independent experts.  

Our relationship-led approach doesn’t end with the money landing in your bank account - we don’t lend to you and then forget about you. You will be supported by a FSE Manager to contact throughout your time with us. Many of our customers come back to us for further funding, sometimes because the original plan needs additional finance and sometimes to fund an entirely new strategy. We will always try and support you on your growth journey; we’re with you for the long term.  

You need extensive assets to get a business loan…

Our funds exist to break down barriers to accessing finance, which means you don’t need assets as collateral. Unlike many mainstream lenders, we don’t rely on charges over property to be able to support you. We take a debenture (a charge over company assets) and a limited personal guarantee from the shareholding directors to underwrite their confidence in the growth forecasts of the business. We are transparent from day one with our security requirements.

Applying for a business loan is too much red tape and you might not even get the funding…

Of course we will need to gain all the information needed to decide whether your business is one we can invest in. These are not grants; they are commercial funds providing loans that need to be repaid. Our industry professionals will be looking to support you while lending responsibly so we are thorough in getting to know you and your business; our due diligence is robust. That said, we’ll ensure this is clear and straightforward and if you’re not suitable for these funds, we’ll let you know quickly, steering you to alternative funding sources where appropriate.

Lenders are only interested in financing teams that fit a high-growth stereoptype…

At FSE we’re really proud of the work we do to engage with businesses from diverse backgrounds and from across the whole of an area where we operate. This includes less-experienced teams, those operating in hard-to-reach geographical areas, those with female leaders and people from ethnic minority backgrounds. We have really strong female representation amongst our leadership at FSE and we are committed to ensuring that diversity is reflected across the range of businesses we work with.

In the South East and East of England, The FSE Group manages the Thames Valley Berkshire Funding Escalator, the Coast to Capital Funding Escalator, The East of England Regional Loan Schemes and the CPCA Business Growth and Social Impact Investment Fund, for a number of fund operators. These funds operate as commercial funds with commercial returns required. Investment decisions are made by The FSE Group, not the fund operator.

As appointed Fund Manager for the British Business Bank’s Investment Fund for Scotland (IFS) and South West Investment Fund (SWIF), The FSE Group is helping ambitious SMEs (small and medium enterprises) overcome hurdles to their growth, providing loans from £100,000 to £2million.

As a provider of finance  for business expansion, we’re more interested in your forecasts than your historic trading performance. As long as you can show that your business is growing and has gained commercial traction such as some sales, confirmed orders etc, we don’t mind if it is early stage, resurgent, recently changed ownership, or pivoting in a new direction.

Where mainstream finance providers will look for evidence that past performance can service your borrowings, we’re interested in the opportunity you are seeking to take tomorrow and not yesterday’s profit. We’re open to taking the time to explore the opportunity so, even if you’ve been unable to access funding before, come and talk to us.

We aren’t about ticking boxes for a computer algorithm to make a lending decision. We want to get to know you; we’re interested in the challenges you’ve overcome, the bumps in the road, and your ambitions. We want to hear your business story to date and understand the opportunity you are seeking to fund. Yes, we undertake desktop research to complement the information you provide to us but fundamentally our appraisal process is personal; no computer-generated responses.

We’ll provide you with a dedicated Investment Manager who will work with you to present the best possible case to get your funding over the line. Complexity in the transaction is likely to be a given in many of our deals and our team are well-qualified to deal with this. They’ll meet with you as much as it takes to fully understand the proposal and will help ensure it’s in the best shape possible before being reviewed by independent experts.  

Our relationship-led approach doesn’t end with the money landing in your bank account - we don’t lend to you and then forget about you. You will be supported by a FSE Manager to contact throughout your time with us. Many of our customers come back to us for further funding, sometimes because the original plan needs additional finance and sometimes to fund an entirely new strategy. We will always try and support you on your growth journey; we’re with you for the long term.  

Our funds exist to break down barriers to accessing finance, which means you don’t need assets as collateral. Unlike many mainstream lenders, we don’t rely on charges over property to be able to support you. We take a debenture (a charge over company assets) and a limited personal guarantee from the shareholding directors to underwrite their confidence in the growth forecasts of the business. We are transparent from day one with our security requirements.

Of course we will need to gain all the information needed to decide whether your business is one we can invest in. These are not grants; they are commercial funds providing loans that need to be repaid. Our industry professionals will be looking to support you while lending responsibly so we are thorough in getting to know you and your business; our due diligence is robust. That said, we’ll ensure this is clear and straightforward and if you’re not suitable for these funds, we’ll let you know quickly, steering you to alternative funding sources where appropriate.

At FSE we’re really proud of the work we do to engage with businesses from diverse backgrounds and from across the whole of an area where we operate. This includes less-experienced teams, those operating in hard-to-reach geographical areas, those with female leaders and people from ethnic minority backgrounds. We have really strong female representation amongst our leadership at FSE and we are committed to ensuring that diversity is reflected across the range of businesses we work with.

The British Business Bank’s Investment Funds operate as commercial funds with commercial returns required. Investment decisions are made by the fund’s appointed fund managers [The FSE Group], not the British Business Bank.

We're delighted to announce that, together with the support of the many and varied lenders we work with, we have now facilitated more than £15m of essential loans and working capital facilities for businesses of all shapes and sizes.

Among the many highlights are:

• A commercial mortgage of £850,000 provided for a company within the film industry supplying camera and audio equipment for blockbuster movies – the mortgage payments are much lower than the rent they were paying and they now have a secure unit to home them as they grow.
• A working capital facility of £200,000 provided for a firm of Architects to aid cashflow whilst working on large, slow paying projects
• A consolidation exercise carried out for a company in civil engineering, which cut monthly debt repayments in half. This enabled them to focus on tendering for new jobs and worry less about the financials of the business.

Of course, we like it best of all when customers come back to us again and again.

• We have helped a repeat customer with asset finance to put a sixth van on the road, having grown to a level where the fleet regularly needs to expand to fulfil demand.
• A portfolio landlord has completed on five buy-to-let properties with us and has handed over the reins to manage his upcoming renewal deals.

We are very proud to have been a part of supporting the SME community in securing much-needed funding, especially through the trials of COVID and its aftermath.

Whether it's been for growth and expansion, getting business owners on the start-up ladder to success, or simply a helping hand with cashflow, we've achieved a lot and have built some lovely business relationships along the way.

Thank you to all our customers for using our services, we wouldn't be here without you.

And here's to the next milestone and many more years of serving business owners in the way we know best - as independent and impartial advisers, with our whole of market brokerage services.

A Guest blog from our friends at Productivity Finance.

Fewer small businesses are now borrowing money according to The British Business Bank’s second annual Nations and Regions Tracker, published yesterday (23 November 2022).

Does that make borrowing a bad idea in 2023? Let's have a closer look at the numbers.

38% of smaller businesses were using external finance in the second quarter of 2022, down from 45% a year earlier, driven mainly by repayment of Bounce Back Loans and CBILS.

Overdrafts, loans, asset finance and credit cards remain the most widely used products, with overdrafts in particular seeing a resurgence. The deteriorating economic picture and increase in input costs is, unsurprisingly, creating the need for more working capital for many.

Asset finance is the most used ‘alternative’ finance product (and, incidentally, the best way of acquiring vehicles and equipment).

The way small businesses are financing themselves is also becoming more varied. The proportion of businesses now only using non-government-backed loans has dropped 15 percentage points to 22%. Indeed, the proportion of businesses using a blend of government-backed loans, grants and traditional finance has increased from 21% to 23%. 

The report also gives insight into the appetite to apply for finance, and the likelihood of being turned down.

Nationally, nearly a quarter (22%) of businesses in need of finance did not apply in 2020-21 and 11% of applications were declined.

The report found that businesses in the most deprived areas of the UK* are more open to using finance and report higher levels of ambition for growth. Nearly half (49%) of businesses in the most deprived areas have a long-term ambition to be a significantly larger business, compared to 40% elsewhere. They are also more willing to use external finance to grow (36% vs.33%). 

So, what does this all mean for you?

There are several useful take-outs from this data for business owners planning their approach to 2023.

• Debt is not something to be taken on lightly, but equally, it is not something to be afraid of. Despite all the gloom, there are growth opportunities in the economy and there are some very early indicators that inflation might be nearing its peak. Carefully considered borrowing to support growth in 2023 could be the right strategy.
• Not applying for the finance you need for fear of being turned down is the wrong approach. A conversation with a good broker may open the way to loan products, loan schemes and providers that you weren't previously aware of, including government funded loan schemes and regional investment funds.
• 11% of loan applications being declined in 2020-21 means that 89% were accepted. The odds are in your favour for any properly presented business case.
• Regional variations in success rates are likely to be driven by differences in property prices (i.e. security), business sector concentrations and the general distribution of wealth influencing credit scores and borrower contributions. Again, a good broker can help you navigate these challenges if you live in one of these areas.
• More businesses are using a mix of government-backed funding, grants and non-government backed loans to meet their overall requirements. A funding strategy or roadmap is a useful part of your business plan and is something that our funding experts can advise on.

If there is anything in this update that affects you, we will be pleased to put you in touch with one of our regional funding experts for advice.

A Guest blog from our friends at Productivity Finance

There are different business finance options available for businesses looking to grow. The FSE Group provides accessible market-gap funding to high growth businesses.

Business Loans:

A business loan is a popular option for businesses. Lenders work with businesses to find a suitable loan amount and repayment plan that meets their needs.

Business loans can be used for a variety of purposes, including purchasing inventory, hiring staff, or expanding the business. They can be offered with fixed or variable interest rates and repayment terms ranging from a few months to several years.

To qualify for a business loan, businesses must have a strong business plan, and a clear understanding of how they will use the funds.

The British Business Bank have more information about business loans on their Finance Hub.

Equity Investment:

Equity investment is another option available to businesses. This type of finance involves selling shares in the business to investors in exchange for funding. Equity investment can be a good option for businesses that are looking to grow quickly and need significant amounts of capital.

One of the advantages of equity investment is that businesses do not have to repay the funds they receive. Instead, investors become shareholders in the business. This can be a good option for businesses that are confident in their ability to grow and generate profits over the long term.

However, equity finance also involves giving up some control of the business to investors. This can be a concern for businesses that want to maintain full control of their operations.

The British Business Bank Finance Hub has more information about equity investments.

Business funding from The FSE Group:

The FSE Group has been providing high-growth SMEs with accessible market-gap funding since 2002. We work with stakeholders and partners, including British Business Bank, Finance Yorkshire, Funding London and Local Enterprise Partnerships, to deliver funding that supports job creation and economic prosperity. FSE is committed to supporting in the long-term, sustainable businesses that will grow, provide employment, and generate economic benefit in an environmentally and socially responsible manner.

For more information visit: www.thefsegroup.com or to enquire directly fill out our enquiry form.