Read the latest overview of the SME Finance Market and solutions available for growing small businesses. Understand the definition of a small business, and why that matters. Important context in today's world of changing finance options. Credit4 provide flexible funding solutions for your business. www.credit4.co.uk

1. Alternative Funding for the ‘S’ in SME

2. Supporting the ‘S’ in SME
Chapters
1. Exploring the definition of SME
2. Are SME’s being catered for in the world of finance?
3. What alternative funding options are there?
4. Preparing your business for funding
5. How we assist in SME growth funding

3. Chapter 1. Exploring the
definition of SME

4. Who or what is an SME?
• The answer depends on what you read!
• Many different definitions
• Based on turnover
• Number of employees
• Giving a very Blurred ‘S’ business profile
• Let’s Google SME…

5. Small: UK Companies Act 2006
Micro
T/O<£6.5m
<50 employees
All the definitions differ

6. • The majority of businesses fall into small category
• No specific differentiation of micro businesses, they
are included in the ‘small’
• What we do know is that a huge proportion of the
private business economy supporting UK growth sits
in small
• Growth in the sector has been significant as depicted
by Government stats
So far we know…
99.3%
0 – 49 Staff
5.3M businesses
employing 12.4M
staff
Majority SME’s

7. Chapter 2. Are SME’s being catered
for in the world of finance?

8. There are mixed messages on the funding
available for them

9. Catering for a specific section of
the SME population
Media Coverage shows some SME funding is
available
All types of SME’s
can apply for funding
as long as
they have been:
• Trading for 3 years
• Have a turnover of
at least £1m
• Operating profit of
£100,000

10. We do acknowledge the high street banks
have played their part and carved out their
own niche in today’s SME financial sector.
However this entails:
• De-skilling so lack the
specialist knowledge
required to underwrite
these enquiries
• No appetite for this type
of lending at this time
• De-risking to reduce exposure in more speculative lending

11. • Approximately 173,500 SME applications are declined annually
• This equates to 3,336 weekly declines, and we know
• 1 in 20 ‘S’ business owners were put off and did not go elsewhere for
finance
• 166 a week stopped looking
• 3,170 a week kept on looking
Why are there so many rejections?
• ‘SME’ is a broad spectrum
• Lenders focus on, and lend to,
specific ‘sections’ within this spectrum
However, rejection puts off many
The conundrum for an ‘S’ is where to look?

12. Chapter 3. What alternative
funding options are there?

13. Where do ‘S’s go next for funding?
Alternative
FundingBank
Do Nothing

14. The Alternative market place
• Crowd Funding
• Invoice Crowd Funding
(secured by single invoice
or debtor book)
• Equity Crowd Funding
• Balance Sheet Funding
(Term lending, asset finance,
cashflow, growth funding,
EPOS based funding etc.)
Funding
Platform
Invest
Interest Repay
Crowd Business
Equity
Borrow
Repay
Sell Shares
Funder
Borrow
There are alternative funders available, notably;
Alternative Funding Sector = Choice from over 100 Funders

15. How to access this market
Access to the funders is surprisingly easy, if you know where to look!
• Direct to each lender via their web site
• Using a specialist Financial Adviser
• Using an aggregator site
• Social Media

16. Aggregator sites collect your information
and present options to you
You answer questions about:
• Funding requirements
• Trading History
• Security available
• Projected profits
• How long funding
is required

17. Once you have found potential funders there are
several important points you need to consider:
• Is the funding appropriate?
• Are there comparable products?
• Do you know the actual costs?
• Is this complimentary to existing funding?
• Are there any penalties for redemption?
• What security will be required, and will it affect the business?
Knowing the answer to all of the above is imperative to ensure you obtain the correct funding
Specialist financial advice can be obtained from NACFB
nacfb.org

18. Chapter 4. Preparing your
business for funding

19. CASHFLOW FORECAST, arguably the most
crucial yardstick by which the affordability of
credit is usually judged by the prospective
lender.
The forecasting process: pleasure or pain?
Optimistic v Pessimistic v Realistic:
the truth will out!
Understand the outputs:
external help is available
1. Cashflow

20. 2. Management Accounts
Why have them?
• Turnover
• Costs
• Gross Profit
• Admin Costs
Indicates
Net
Profit
How often?
• Daily / Weekly / Monthly
/ Half Yearly…
Cloud Technology is available
some lenders require access to
view business transactions
Value

21. • Is it worth the time, effort, & cost
• A window for the business and the people
behind it
• Be prepared to answer questions
• It demonstrates market knowledge
• Provides a benchmark for future
performance
• Most entrepreneurs ‘Talk the Talk’ but
cannot transfer their enthusiasm onto
paper
3. Business Plan

22. Chapter 5. How we assist in SME
growth funding

23. • Established in October 2013- Brief ‘to fill the SME growth funding gap
• Start up funding/grants-£25,000 2nd tier funding £150,000+
• Funding for all business growth for businesses trading 1+ years
• To provide innovative products with absolute clarity of pricing
• Credit4’s flexible funding is available to a range of UK businesses including
• 70% of ‘S’ in SME’s are sole traders and partnerships!
• Credit4 has two types of funding available:
‘Flexible Facility’ and ‘Dual Growth Funding
GAP

24. Flexible Funding
*£15k - £50k
*12 months
*Arrangement Fee 4%
*Interest serviced fortnightly
*Capital repaid at the end of the term
£15k £50k
1 2 3 4 5 6 7 8 9 10 11 12
Paid on completion
*Flexible to us, repay, redraw as often as you like

25. *12-24
months
*Arrangement Fee 3.5%
*FF Interest serviced fortnightly
*Amortising Term Loan repaid monthly
*Capital repaid at the end of the term
£50k £100k
*£50k - £100k
1 2 3 4 5 6 7 8 9 10 11 12
13 14 15 16 17 18 19 20 21 22 23 24
Paid on completion
*Flexible Facility PLUS fixed term loan to extend total value

26. Businesses must be UK registered
The funding MUST be used for business
growth opportunities
All directors/Owners must provide a suitable
Personal Guarantee
Funding must be for £15,000 - £100,000 over
12 – 24 months
There are 4 basic requirements:

27. • We do not underwrite by algorithm
• We take time to get to know the business owners
and their business
• We get to know the business drivers
and understand the growth potential
• We look to support the businesses from their early
years and will signpost clients to appropriate
funders when applicable
How are we different?

28. Summary
• The significant percentage of the ‘S’ in SME refers to MICRO business
• The M (representing 0.6% of the business community) are generally the
businesses used for reporting lending availability in the SME sector.
• Start up grants and loans are available (usually on a regional basis)
• Funding for businesses with 2+years trading history and minimum
turnover of £200,000+ has become increasingly available
• Funding between start-up and 3 years+ trading is still difficult to obtain
• Alternative Business Funding provides SME’s with CHOICE
• Alternative Business Funding provide SME’s with TAILORED options
• Credit4 is one of the funders who fund business GROWTH from
early years onwards where appropriate for the business