Access to Finance & Business Planning for

Small and Medium Enterprises

Caeman Wall

Presentation Outline

Fáilte Ireland‟s Business Planning Tools and Calculators

Some Finance Options

Useful Templates

Recent Developments in Credit Availability

The Credit Review Office

Microfinance Ireland

Temporary Partial Loan Guarantee Scheme

FI’s Business Tools and Calculators

A handy resource for business planning

Practical guides and easy-to-use templates

The calculator tools are a great back-up to support any funding request

Helps to build and/or show your „financial literacy‟

http://www.failteireland.ie/Business-Tools/Calculator-Tools.aspx

FI’s Business Tools & Calculators

An handy resource for business planning.

Practical guides and easy-to-use templates.

The calculator tools are a great back-up to support any funding request.

Helps to build and/or show your „financial literacy‟.

http://www.failteireland.ie/Business-Tools/Calculator-Tools.aspx

Some Finance Options

Equity:

Retained Earnings

Equity Injections

Government Supports:

Feasibility study grants

Some funding for expansion via CEBs/Leader groups

Employment and Investment Incentive (EII) Scheme – replaced the old BES

Microfinance Ireland

Some Finance Options – Medium Term Credit

Term Loan Usually associated with the purchase of a major asset or with business expansion

Leasing - Finance Lease Enables the business to lease or rent the asset

Leasing - Contract Hire/Operating Lease This is similar to a finance lease, except that the lessor is usually responsible for maintenance

Hire Purchase Ownership of the asset only transfers to you when the last payment has been made

Some Finance Options – Long Term Credit

Fixed Asset Loan Enables a business to purchase an asset and pay for it over the asset‟s useful life

Sale and Leaseback Agreement The business may reach an agreement with a financial institution under which the firm sells an asset to it and then takes out a long-term lease on the asset sold

Commercial Mortgage

Useful Templates and Guidance Material

The accountancy bodies and the IBF developed a “common approach in the preparation of business plans and raising of bank finance”

This means:

There is a common, standard credit application form

Code of Conduct for Business Lending to SMEs

Set timeline for loan processing by banks

Useful Templates & Guidance Material

See the following site http://www.smallbusinessfinance.ie/ for two very useful documents:

MS Word based business planning template

MS Excel based business integrated financial model

Using the templates helps to build and/or show your „financial literacy‟

Useful Templates & Guidance Material

See the following site http://www.smallbusinessfinance.ie/ for two very useful documents:

MS Word based business planning template.

MS Excel based business integrated financial model.

Using the templates helps to build and/or show your „financial literacy‟.

A Business Plan’s Content

Promoter‟s experience and skills

Purpose of the funds sought

Realistic cash flow projections

Evidence of repayment capacity

Personal financial commitment to the business

Evidence of good market research

Breakdown of how funds will be used

Unique selling points

A Financial Plan’s Content (where possible)

Auditor‟s statements for the previous three year or equivalent annual financial statements

Up-to-date management accounts and cash flow statements

Up-to-date aged list of creditors and debtors

Financial and cash flow projections and underlying assumptions (ideally for period for which funding is sought)

Details of all sources of funding: banks want to see what proportion of funding will be provided by the borrower; c.30% is usually required

Recent Developments – Credit Review Office

A review process for SMEs and sole traders refused credit from banks participating in NAMA

It accepts applications from those who have had their application for credit refused or reduced or have had credit facilities withdrawn, and feel that the bank‟s decision is unjustified

The following eligibility criteria apply:

The business is an SME or sole trader

It has applied for credit facilities from €1,000 up to €500,000

The credit facility was refused and the business has exhausted the banks internal appeals process

Recent Developments – Microfinance Ireland

Microfinance Ireland‟s objective is to provide additional lending to start-up, newly established or growing microenterprises

Funded by the government to provide loans to newly established and growing microenterprises – turnover less than €2m and less than 10 staff

In the first instance you should approach your bank for credit; if declined, then you are eligible to apply

Applications can be made directly or via a CEB

Loan limits of €25,000. Average loan size of €15,000

http://microfinanceireland.ie

Recent Developments – Loan Guarantee Scheme

Gets credit to SMEs who currently struggle to get bank finance by giving a 75% guarantee to banks against losses on qualifying loans to firms with growth and job creation potential

Applies in two cases (a) where viable businesses have insufficient collateral and (b) where businesses operate in sectors unfamiliar to banks

The purpose of the scheme is to encourage additional lending to SMEs; therefore, the scheme only kicks in when a loan is refused by a bank based on the situations outlined above