1. Alternative sources of finance November 2012

2. AgendaAlternative sources of finance Introduction Alternative lenders Business angels Peer to peer lending / Crowd funding Soft loans Grants Working capital improvements Other ideas 3. Introduction Since the credit crunch of 2008 financehas been more difficult to obtain The availability of credit has beenrestricted through Banks being more riskaverse as well as new regulations Growth in demand for finance isexpected to create a funding gap ofbetween 84bn and 191bn. 4. IntroductionOnly 23% of those responsible for makingfinance decisions in SMEs have a financialqualification; only 23% of SMEs are awareof the Enterprise Finance Guarantee andonly 17% of SMEs were aware of theMerlin agreement despite widespreadpress coverage.Source: BIS - Boosting Finance Options for Business March 2012 5. Alternative lendersAn alternative to borrowing from high streetbanks.Key features Flexible approach to lending Quick decision making Fixed interest rates Straightforward term loan agreements Work closely with management 6. Business angelsExperienced business professionals orentrepreneurs looking to invest inbusinesses with high growth potential.Key features Invest in return for equity Often take an active role in management Seek high returns on their investments Quick investment decisions 7. Peer to peer lendingIndividuals lend directly to Companiesthrough online lending platforms.Key features Lenders set their own interest ratesbased on the risk rating allocated The borrowers rate is subject to areverse auction Not covered under the FSCS Not suitable for start up companies 8. Soft loansSome government and charitable bodieswill lend to businesses on favourableterms.Examples PSYBT supporting young people in business with loans of up to 25k East / West of Scotland Loan Fund loans of up to 50k 9. GrantsMostly issued by Government agencies fora specific purpose or project and unlikeloans they do not need to be paid back.Examples RSA up to 35% support for investment that will result in the creation of jobs Smart : Scotland discretionary grants of up to 600k to support feasibility studies, and research and development (R&D) projects 10. Working capital improvementsAvoid the need for third party funding throughmore efficient management of internal cash.Things to consider Supplier credit terms can you agree moregenerous credit terms? Credit control are your customers payingwithin agreed credit terms? Stock management are you carryingexcess stock? 11. Other ideas SIB Scottish Loan Fund mezzanineloans from 250k to 5m Credit cards Merchant cash advance Family loans Personal savings 12. Summary There are more alternative sources offinance than you may think. Some may still be difficult to access. Some will more expensive thantraditional bank finance. Maintaining good financial records and arobust, sensible business plan is key tounlocking finance from traditional or newsources of finance. 13. Presenters detailsRoss HarrisHarris Finance Company0141 647 400007970 787033ross.harris@harrisfinance.co.ukwww.harrisfinance.co.uk