K2 guide business finance 2013 version 1


K2 Partners Ltd 2013
K2’s Business Finance Guide
for
Entrepreneurs and SMEs
prepared by
K2 Business Partners
a trading name of
K2 Partners Ltd
Sources of Finance for Start-ups and SMEs
with specific emphasis on Business Growth
64 Lower Sloane Street
London, SW1W 8BP
tel 020 7720 8000
tel 0844 80 40 420
www.partners.com


K2 Partners Ltd 2013
Tony Groom
64 Lower Sloane St, London, SW1W 8BP
tel 020 7720 8000
tel 0844 80 40 420
www.k2-partners.com

K2’s Business Finance Guide for
Entrepreneurs and SMEs
Sources of Finance for Start-ups and SMEs
with specific emphasis on Business Growth
CONTENTS
SECTION PAGE
1. INTRODUCTION 2
2. WHAT IS BUSINESS FINANCE 2
3. AN OVERVIEW OF BUSINESS FINANCE 3
4. TRADITIONAL SOURCES OF EQUITY FINANCE 4
5. TRADITIONAL SOURCES OF DEBT FINANCE 6
6. ALTERNATIVE SOURCES OF EQUITY FINANCE 10
7. ALTERNATIVE SOURCES OF DEBT FINANCE 12
8. OTHER & CREATIVE SOURCES OF FINANCE 14
DISCLAIMER
K2 Business Partners is a trading name of K2 Partners Ltd. We would like to make it clear that we have no
involvement or link to any of the organisations listed in this guide. The comments we make about each
source and its inclusion in this guide is not a recommendation that they may be an appropriate source of
finance for your business. Furthermore the reference to a source in this guide does not confer any
investment related advice. The information contained in this guide and in the associated Directory of Sources
is for reference only.

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K2 Partners Ltd 2013 2013 Edition
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2
1. INTRODUCTION
This Guide has been prepared in order to assist you identify possible sources of finance for your business.
It’s origin is the Entrepreneur’s Guide to External Sources of Finance that Tony Groom, the Managing
Director of K2 Partners Ltd, updated annually throughout the 90s to help fund the equity gap when it was
difficult to find investments of between £50k and £1m. The easy access to finance meant that Guide became
redundant. However the recent period of austerity has made it more difficult for SMEs to find cash hence our
new Guide.
Raising finance, either as equity or debt will need you to demonstrate that your plan is thoroughly researched
and your business is viable. This means you will need to have a business plan (see our guide to business
plans) that includes your market research to justify the revenue and margins you hope to achieve.
Before agreeing to accept funds from any source you should carry out your own due diligence on the
provider. You should know who is actually providing the funds, exactly what the terms and conditions are,
whether they are equity or debt. If equity, what are the investors’ rights and their terms? If debt, is it a
secured loan or unsecured, how much it will cost in interest payments and are you providing a personal
guarantee? You should also know if there are any up-front or introduction fees and the criteria for termination
or early termination costs as these can sometimes be penal.
2. WHAT IS BUSINESS FINANCE
Every business needs finance whether to develop an idea, establish the business, grow it or tie up the
working capital necessary when the business is stable. The source of finance is traditionally broken down
into equity and debt. Both are accounted for on the balance sheet but they are fundamentally different as any
debt must be repaid. Despite this the providers of debt finance often use terms that conceal the true nature
of the funds they provide which can be confusing hence the need to read the small print.
Your business model is key to successful funding and relies on having appropriate finance depending on the
stage of the business cycle. Crucially a viable business is needed to justify loans and credit from debt
providers, and a viable plan for rewarding investors is needed to justify equity providers.
The rest of our guide seeks to define the categories of finance available and provide named sources. The
associated Directory of Sources has contact details and a visual grid that makes it easy for you to find
finance for your business.
If you are a finance provider and we have the wrong classification or wrong contact details for you, please
accept our apology and simply let us have the correct details.

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3. AN OVERVIEW OF BUSINESS FINANCE
We have attempted to summarise the various categories and types of finance that might be available in a
chart. We have allocated them to the most relevant phase in the business cycle but it is somewhat simplistic
so please also consider them as potential sources for other phases.

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4. TRADITIONAL SOURCES OF EQUITY FINANCE
Equity is the capital of a business and is normally provided by its owners in the form of share capital
although different classes of shares can have different rights with venture capital often invested in the form of
preference shares that confer rights that rank ahead of the founders.
Traditional sources of equity finance
CATEGORY/ SECTOR NOTES SOURCE
Personal/ founders Savings, pension release, personal asset
sales, re-mortgage house. Obtain advice
on tax relief for equity investment portion.
Friends & family Those who know you best are best
placed to assess your commitment to
providing a return on their investment.
You are advised to seek help from a
solicitor to get investment and
shareholder paperwork right
Useful resources:
Personal contacts;
Angel investors Angel investors tend to invest their own
money either in sectors they know or local
businesses. Often they are led by an
Arch-Angel who co-ordinates on behalf of
a small group of investors introduced by
the angel network they deal with. Dilutes
ownership but can provide additional
management resource. Need shareholder
agreement. You are advised to seek help
from a solicitor to get investment and
shareholder paperwork right. Beware the
so-called investor looking for a job. Most
angels bring far more value than the
cash. Consider a pre-investment trial to
check you will get on. Take up references
on those investors who will be appointed
as executives.
There are a number of prominent angel
investors including the Dragons from
Dragons Den and Online Den and others
like Charles Dunstone and Jon Moulton.
Angel investors can be tax efficient if part
of the Government initiative referred to as
the Enterprise Investment Scheme (EIS).
Useful resources:
Business Angel Network Assn -
www.ukbusinessangelsassociation.org.uk
;
Potential sources:
National:
Advantage Business Angels; Beer &
Partners; Charlotte Street Capital; Clearly
Social Angels; Envestors; FSE Group; Go
Beyond Ltd; Invent Network; IW Capital
Ltd; Qi3 Accelerator; Seedcamp; Seedrs
Ltd; Thames Valley Investment Network;
WK Capital LLP; Wren Capital; Yorkshire
Association of Business Angels;
Regional:
Cambridge Capital Group; Central
England Business Angels; Connect
London; Entrust; Galore Investments Ltd;
HALO; London Business Angels; Minerva
Business Angel Network; Northwest
Business Angels; Oxford Investment
Opportunity Network; Silicon Beach
Business Angels Ltd; SWAIN; xénos;
Seed funding Seed funding for entrepreneurs is
sometimes also referred to as frugal
capital but normally aimed at developing
the idea & a business plan rather than
funding marketing activities. Some funds
are supported by the Government
initiative referred to as the Seed
Enterprise Investment Scheme (SEIS).
Potential sources:
Amadeus Capital Partners Ltd;
Jenson Seed EIS Fund;
London Seed Capital;
Oxford Technology Management;
Shell LiveWIRE;
Zero Start Ventures;

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Venture capital There are very few venture capital firms
(VCs) left for SMEs to raise capital in UK.
VCs have either become PEs or are
targeting large investments. Few VCs are
able to raise new funds and as a result
are in decline. VCs normally involve a
fund that is managed by professional fund
managers who have themselves also
invested in the fund. Some focus on
specific sectors but they are all looking for
growth and will only back proven
management with a good plan that
includes a clear exit to realise value for
the fund. You may need to agree to bring
in such a manager as a term of
investment. Often term funds with a fixed
exit timeframe of 3-7 years. Generally
VCs only take minority equity stakes as
they don’t want to take control if
management fails to perform. Contacts
listed are mainly those that deal with
SMEs. The exception with cash to invest
is the Business Growth Fund that is
sponsored by the banks and government
to target investments of £2-10 million with
a minimum of £1m.
Useful resources:
Business Angel Network Assn -
www.ukbusinessangelsassociation.org.uk
;
British Venture Capital Association -
www.bvca.co.uk;
Potential sources:
National:
Augmentum Capital;
Business Growth Fund;
Capital for Enterprise;
Catapult Venture Managers Ltd;
EC1 Capital Ltd;
Eden Ventures;
European Founders Fund;
Finance Wales;
Leopard Rock Capital;
Midven;
MMC Ventures;
Nesta;
Octopus Investments;
Royal Society Enterprise Fund;
Seraphim Capital;
Summit Group;
Wolf-Pack Investments Ltd;
Cass Entrepreneurship Fund;
Northstar Ventures
Sussex Place Ventures Ltd;
Private equity Private equity is normally a fund that is
managed by professional business
managers who prefer to take control of
their investment companies. Most like
strong cash flow with potential to improve
it by cost saving, consolidation, growth
and or scope for short-term exit or
refinance. Generally PEs are not right for
SMEs except as an exit or in a distressed
situation. Few PEs deal with SMEs as
they back entrepreneurs and
management teams of mid-market
companies with typical growth potential
for an EV of above £50m.
Useful resources:
British Venture Capital Association
(BVCA) - www.bvca.co.uk
Potential sources:
Risk Capital Partners;
Regional &
industrial renewal
funds
A number of industrial and regional
funding initiatives have been set up to
encourage employment by investment in
new business to provide for renewal of
blighted areas where larger industries had
been closed down.
This should not be confused with the
Government’s Regional Growth Fund
initiative that has a minimum bid threshold
of £1m.
Potential sources:
UK Steel Enterprise;

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5. TRADITIONAL SOURCES OF DEBT FINANCE
Debts are the loans to a business or when liabilities become due and they can be either secured or
unsecured. Secured debts, normally loans, are those where the lender has the right to seize assets in the
event of a defined loan default. They can convert (sell) the owned or seized assets, such as book debts,
equipment and property, into cash. Unsecured debts are those where the business owes money and it is not
paid on terms but the creditor must pursue recovery through the courts. In some instances the providers of
loans or credit to a business require third party security such as collateral security (over a personal or third
party asset/property) or a personal guarantee provided as a security against the business being unable to
pay the debt.
Traditional sources of debt finance
Personal/ founders Many SMEs are funded with personal
loans, often treated as long-term or
shareholder loans. The issue is that these
are a liability on the balance sheet which
as a result can look weak and therefore
leave the business unable to get credit or
borrow. Any such loans ought to be
genuinely repayable or converted into
share capital.
Friends & family This is similar to personal loans but all too
often regarded as a debt of honour. The
failure to put in place proper loan
agreements often results in a breakdown
of the relationship with family and friends.
You are advised to seek help from a
solicitor to get loan paperwork right.

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Bank with collateral
security or personal
guarantee
Fundamentally banks want reassurance
that they will be repaid and providing they
have adequate security they will charge
interest at a relatively low rate that
doesn’t incorporate a premium for any
risk. Therefore lending to SMEs is
normally against security. Security is
normally a business asset where the
funds provided will be a discount to its
value so that in the event of recovery they
can also cover their costs out of the
realisation (sale) of the asset. Where
there are no tangible or realisable assets,
the may seek collateral security such as
from a director putting up a house, or they
may seek a personal guarantee from
someone who has sufficient personal
assets and is good for the money. They
don’t like to call upon these third party
claims but hope that the sanction is
sufficient to ensure directors are cautious
in the knowledge that they as directors
can be held liable for repayment.
While some of banks listed will be well
known as general banks, others offer
loans to local SMEs or specialise in
particular aspects of business.
Useful resources:
British Bankers Association (BBA) -
www.bba.org.uk
Potential sources:
Aldermore;
Allied Irish Bank plc;
Arab National Bank;
Arbuthnot Latham & Co Ltd;
Banco Bilbao Vizcaya Argentaria SA;
Bank Leumi (UK) plc;
Bank of America NA;
Barclays Bank Group;
BNP Paribas Fortis;
Cambridge & Counties Bank;
Close Brothers Ltd;
Clydesdale Bank plc;
Commerzbank AG;
Commonwealth Bank of Australia;
Credit Industriel et Commercial;
HSBC Bank Group;
ING Bank NV;
Julian Hodge Bank Ltd;
KBC Financial Products UK Ltd;
Lloyds Banking Group;
Metro Bank Plc;
National Westminster Bank plc;
Nedbank Ltd;
Santander UK Group;
Svenska Handelsbanken AB;
The Co-operative Bank plc;
Ulster Bank Ltd;
Union Bank UK plc;
Unity Trust Bank plc;

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Sales ledger finance Sales ledger finance also known as
invoice finance or book debt finance takes
two main forms - debt factoring and
invoice discounting.
In both instances the provider normally
advances 70 - 85% of the value of each
invoice on the basis that your invoices are
not advance payments and are not
disputed. Receipts from both are paid into
a dedicated bank account with surplus
above the advance paid to you less the
provider's fees. Both are normally
recoursed which means returned to you
for payment if unpaid within an agreed
period, normally 3 months, although bad
debt insurance is available for a premium.
Factoring involves transferring ownership
of invoices to a finance provider who
deals with your customers to chase
payment and administer your sales
ledger.
Invoice discounting (ID) involve borrowing
against invoices with you dealing with
customers to collect payment and
administer your sales ledger. ID can be
provided on a confidential or disclosed
basis.
Pros: the drawdown amount increases as
the business grows; improves cashflow
giving you access to additional funds;
introduces credit control discipline.
Cons: it only works when goods or
services are sold on credit to credit
worthy organisations; not cheap although
competition has driven down costs for
larger firms; can get tied into long term
contracts; often expensive to terminate at
short notice; propensity to appoint
administrators if you fall out with them.
You are normally required to finance the
whole sales ledger and you should be
aware of the onerous contractual
obligations and in particular the
termination of their agreement.
Useful resources:
Asset Based Finance Association (ABFA)
- www.abfa.org.uk;
Business Money - www.business-
money.com;
Potential sources:
ABN AMRO Commercial Finance;
Aldermore Invoice Finance;
Ashley Commercial Finance;
Bank of Ireland Commercial Finance,
Belfast;
Barclays Corporate;
Bibby Financial Services;
BNP Paribas Commercial Finance Ltd;
Calverton Factors;
Centric Commercial Finance Ltd;
Close Brothers Invoice Finance Ltd;
Clydesdale and Yorkshire Bank Invoice
Finance;
Factor 21 plc;
FGI Finance;
GE Capital Bank Ltd;
Gener8 Finance;
Hitachi Capital Invoice Finance;
HSBC Invoice Finance (UK) Ltd;
Independent Growth Finance;
Innovation Finance;
Leumi ABL Ltd;
Lloyds TSB Commercial Finance;
Positive Cashflow Finance Ltd;
Pulse Cashflow Finance;
RBS Invoice Finance;
Regency Factors Invoice Finance Ltd;
Santander Invoice Finance;
Skipton Business Finance Ltd;
SME Invoice Finance Ltd;
Tandem Invoice Finance;
Team Factors Ltd;
The Interface Financial Group;
Ultimate Finance Group plc;

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Asset based lending
(ABL)
ABL covers a wide range of finance
solutions but all relate to specific pledge
security over tangible assets. The assets
that may be considered as offering
suitable security for finance include: plant
& machinery; vehicles; IT equipment; raw
materials, stock, inventory & finished
goods.
The finance agreement may be a hire
purchase where you own the asset or a
lease where the provider owns the asset.
In both cases the provider has security in
the form of a specific pledge over the
asset in respect of outstanding payments
under the agreement.
Useful resources:
Most of the banks listed above;
Asset Based Finance Association (ABFA)
- www.abfa.org.uk;
Business Money - www.business-
money.com;
Potential sources:
ABN AMRO Commercial Finance;
Aldermore Bank plc;
Bank of America;
Bank of London and The Middle East;
BNP Paribas Commercial Finance Ltd;
Burdale Financial Ltd;
Centric Commercial Finance Ltd;
Close Brothers Leasing;
First Trust Bank;
GE Capital Bank Ltd;
PNC Business Credit;
State Securities Plc;
Maxxia UK;
Property backed
loans
The lack of bank lending has spawned a
number of corporate lenders who provide
loans secured against property. They
normally want either a first or second
charge with plenty of security, normally a
loan to value of less that 70%
Potential sources:
Portman Finance Ltd;
Trade finance for
property &
construction
projects
Property & construction finance is a sub-
set of ABL specialising in asset finance,
bridging finance and development finance
Potential sources:
Cavendish Investments;
Nucleus Commercial Finance Ltd;
United Trust Bank Ltd;
Trade for imports,
projects & supply
chain
Trade, import, project and supply chain
finance is a sub-set of ABL specialising in
end-to-end finance of goods via reverse
factoring, purchase order finance, stock
finance. Importers normally deal with
letters of credit, documentary collections
to payments to suppliers and foreign
exchange. International trade finance has
been left by most European banks to the
ABL providers due to the complexity of
cross-border and multi-jurisdiction issues
as well as export factoring, credit
insurance, forfeiting, goods in transit and
letters of credit.
Potential sources:
Conance Ltd;
Islamic finance Sharia'a compliance is a specialist area
and generally dominated by those Banks
with roots in Islamic countries.
Potential sources:
Bank of London and the Middle East plc;
United National Bank Ltd;

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6. ALTERNATIVE SOURCES OF EQUITY FINANCE
Despite a withdrawal by traditional venture capital from the SME market, it has been replaced by internet
platforms that can be used to find investors or can consolidate a number of investors to provide crowd-
funding.
Alternative sources of equity finance
Current employers It has become increasingly common for
employers to assist entrepreneurial staff
by recognising they will leave but
providing a level of support. The term
Intrepreneurs is often used and the
employer may retain staff for longer or
justify a stake in the new enterprise.
Potential sources:
Employer;
R&D partners Entrepreneurs get others to help them
and cut deals. This is a key skill and can
save cash when expertise and intellectual
property is needed. Just ask and make it
worth others helping you.
Potential sources:
Firms that can provide support for R&D;
Innovation &
invention investors
There are a number of very early stage
investment programmes focussed on
innovation & invention to provide finance
& support for outstanding ideas for new
products or services.
Potential sources:
National Endowment for Science,
Technology and the Arts (NESTA);
Social, charitable &
ethical angels &
investors
A number of organisations co-ordinate
investment in businesses with a social,
charitable or ethical dimension. Others
are allocated to deprived areas.
Potential sources:
The Community Development Venture
Fund;
Crowd / peer-to-peer
investors
Crowd-funding is an alternative way of
sourcing investment from business
angels. It is an online market with no
middlemen and can be very quick with
individuals investing smaller amounts of
money - usually between £100 and
£10,000 - into a business. The individual
investments are pooled collectively to
help a business reach its funding target.
The investors consider an online proposal
but the platform provider normally vets
the proposal and in particular the
creditworthiness of the people behind the
business. Beware of some pitfalls of
crowd-funding it can leave you with lots of
shareholders that can scare off a
subsequent sale or future investors like
venture capital or angel funders. There is
no secondary market for equity
purchased via crowd-funding.
Useful resources:
UK Crowdfunding Association -
www.ukcfa.org.uk
Potential sources:
Bank to the Future;
Company Partners;
Crowdbnk;
Crowdcube Ltd;
FTG Finance Services Ltd t/as
FundTheGap;
Investing Zone;
Kickstarter;
Peoplefundit;
Please Find Us;
Seedrs;
SellaBand;
Uinvest;
We Fund Ltd;
Client / customer
partners
Entrepreneurs cut deals and often clients
like the idea of owning equity in a
supplier. It is often just a matter of your
personality.
Potential sources:
Clients & potential clients;

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Government growth
incentive schemes
Government initiatives for SMEs come
and go but with the intention of
encouraging growth and employment.
The latest one launched in 2012 provides
a funded mentoring service.
Potential sources:
GrowthAccelerator;
Supplier partners Entrepreneurs cut deals and often
suppliers like the idea of owning equity in
a customer. It is often just a matter of
your personality.
Potential sources:
Suppliers;

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7. ALTERNATIVE SOURCES OF DEBT FINANCE
There are many different sources of finance but as has been frequently reported the most obvious source,
bank lending, has become increasingly difficult to obtain, particularly by small and medium sized companies
(SMEs). This is hardly surprising given that banks expect to be repaid and should only be lending when they
can be certain of being repaid. After all, it’s our money they are lending.
Despite a withdrawal by banks from lending to Entrepreneurs and SMEs there are plenty of other ways to
finance a business. Many have taken advantage of the internet with the introduction of online administration
of loans and peer-to-peer lending.
Alternative sources of debt finance
Client/ supplier
support & loans
Entrepreneurs cut deals and often
potential clients and suppliers like the
idea of providing support that can be
office premises, staff, accounting, legal or
other services, use of equipment or even
soft loans. It is often just a matter of your
personality.
Potential sources:
Potential clients & potential suppliers;
Crowd / peer-to-peer
loans
This is similar to crowd-funding in that it is
generally carried out online but it offers
small savers an opportunity to lend to
borrowers at a higher rate of return than
through the more traditional savings
routes. It is increasingly being used by
small businesses and start ups.P2P
lending is not covered by the Financial
Services Compensation Scheme, so
there is no guarantee lenders will get their
money back. Some peer to peer lenders
distribute savers’ loans among several
borrowers to minimise the risk to the
lenders. Borrowers should expect to
undergo a credit check.
Useful resources:
P2P Finance Association -
www.p2pfinanceassociation.org.uk;
Potential sources:
Abundance;
Buzzbnk;
Funding Circle;
Funding Knight;
Instant Working Capital (IWOCA);
Rebuildingsociety.com Limited
Retail Money Market Ltd t/as RateSetter;
Sponsume;
ThinCats;
Zopa;
Online invoice /
trade finance
auctions
Some the crowd-lending platforms
operate as auctions to fund invoices or
trade contracts. These lenders are
secured and are paid when the invoice or
contract is paid. A big benefit is that these
tend to be flexible where you can borrow
against a single invoice without the
onerous contractual obligations and need
to hand over the whole sales ledger that
are demanded by most traditional invoice
finance firms.
Useful resources:
Potential sources:
MarketInvoice;
Platform Black;

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Government start-
up loans scheme
There are a number of government
initiatives to support start-ups. Most are
provided and administered by banks but
some can be accessed direct such as
include the Start-Up Loans initiative
promoted by James Caan from Dragon’s
Den. It aims to boost enterprise amongst
18-30 year olds by providing loans up to
£25k alongside mentoring although the
upper age limit is under review and may
in due course be increqased.
Potential sources:
Start-Up Loans Company;
Corporate lenders There are a number of corporate lenders
looking to take advantage of the lack of
bank lending.
Potential sources:
Business Financial Services (UK) Ltd t/as
Boost Capital;
Wonga.com Ltd t/as Wonga Business;
Social, charitable &
ethical lenders
A number of lenders specialise in
supporting those businesses with a
social, charitable or ethical dimension.
Others lend to organisations in deprived
areas.
Potential sources:
Adventure Capital Fund;
Big Issue Invest;
Charity Bank;
Futurebuilders England;
Triodos Bank;
Unity Trust Bank;
Co-operative & Community Finance;
Community Development Finance;

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8. OTHER & CREATIVE SOURCES OF FINANCE
There are plenty of ways to fund a business without equity or loans. While not recommended and certainly
not to be undertaken without a plan, one extreme is ‘boot strapping the business’ whereby purchases are
made on credit without orders in place, as a form of ‘hope’ that the income will come and be sufficient to pay
the debts. Indeed the philosophy of ‘boot strapping’ can introduce sound financial discipline to a new
enterprise by challenging the need for expenditure and being conscious of cash. Other entrepreneurs have
used personal credit cards.
We have listed below some of the more conservative ideas for supporting a business without finance.
Other & creative sources of finance
Unemployment
benefit, job
Simply sign on while you write your
business plan although you should be
aware that a condition of receiving
unemployment benefits is that you are
required to demonstrate that you are
seeking employment. There are however
start-up grants and loans that may be
more relevant. It is also common for
entrepreneurs to start a new business
while still employed but you should first
check your contract of employment and
may need to obtain consent from your
employer.
Incubators Dilutes ownership but can provide
additional management resource.
Term usually fixed with exit pre-
determined and normally 3-7 years.
Each fund tends to specialise and
therefore research will save time.
Funds tend to look for a distinctive
competitive advantage or at least strong
growth potential. Management usually
requires proven track record or to accept
Fund's representative.
British Venture Capital Association 071-
233 5212
Corporate
sponsorship/
grants/ discounts
With a bit of imagination, entrepreneurs
will find ways of getting sponsorship and
discounts. The founder of Yo Sushi
recognised those Japanese firms like JAL
and BoJ that gave him a discount by
referring to them on the cover of his
business plan that successfully raised
finance.

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Government
support/ start-up
grants
A large number of schemes are available
to help your business, including: grants,
publicly-backed finance and loans,
business support eg mentoring &
consultancy.
Useful resources:
Government Business and Support
Finder - www.gov.uk/business-finance-
support-finder;
Government Guide on SME Access to
Finance Scheme -
www.gov.uk/government/uploads/system/
uploads/attachment_data/file/192618/bis-
13-p176b-sme-access-to-finance-
measures.pdf;
Government
innovation
initiatives
Knowledge Transfer Partnerships (KTP)
support and fund projects for UK SMEs
(and large businesses) wanting to
improve their competitiveness,
productivity and performance by
accessing the knowledge and expertise
available within UK Universities and
Colleges. KTP works with creative
organisations, including design, fashion,
music and video games businesses, also
engineering and manufacturing and
Information and Communication
Technologies (ICT) businesses.
Useful resources:
Technology Strategy Board -
www.innovateuk.org;
Knowledge Transfer Partnerships -
www.ktponline.org.uk;
Innovation Vouchers –
vouchers.innovateuk.org;
R&D tax credits This is a particularly valuable credit
available as a refund on R&D
expenditure. It is accessed via your
corporation tax return – speak to your
accountant or a firm that specialises in
recovering them.
Useful resources:
Tax accountants;
GrantTree Ltd - www.granttree.co.uk;
Sweat equity This is aimed at getting help from key
people when you can afford it. Essentially
equity in offered in lieu of payment or you
can offer deferred consideration or
milestone payments to key people,
whether employees or sub-contractors.
Useful resources:
Employees & sub-contractors;
Government tax
based investment
initiatives
The Enterprise Investment Scheme (EIS)
and the more recent Seed Enterprise
Investment Scheme (SEIS) were
introduced to encourage private and
venture capital investment from non-
connected, third-party investors. They
offer tax based incentives including
income tax relief on investments in share
capital.
Useful resources:
www.hmrc.gov.uk/eis;
www.seiswindow.org.uk;
Customers/ clients Customers & contractual terms for early
payment. Entrepreneurs cut deals and
often clients like the idea of owning equity
in a supplier. It is often just a matter of
your personality.
Useful resources:
Customers & contractual terms;

Sources of Finance

www.k2-partners.com
16
Supplier credit Suppliers & contractual terms.
Entrepreneurs cut deals and often
suppliers like the idea of owning equity in
a customer. It is often just a matter of
your personality. Beware those suppliers
that incorporate personal guarantees in
their credit agreements and in their
delivery/ collection notes. This is
commonly used by suppliers to the
building industry, in particular the large
building materials suppliers and plant hire
companies.
Useful resources:
Suppliers;
Retained profit Business model determines how much
working capital is left in the business to
weather problems in the future or fund
growth.
Matched terms -
creditor/ debtor
Business model & contractual terms such
as 30 days credit with customers and 30
days credit with suppliers, or borrow
against book debts and pay suppliers on
delivery.
Useful resources:
Customers & suppliers & contractual
terms;
Happy hunting and do let us know how you get on so we can keep details and comments about the sources
current.
Email: finance@k2-partners.com

K2 guide business finance 2013 version 1

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