Phil Hall 1 Comment

Need money to fund your start-up? Try the SEIS with Assured FD.

Have you had that fabulous idea that cannot fail, but can’t get funding from your Bank without giving a personal guarantee?

Then the SEIS, or Seed Enterprise Investment Scheme to give it its full name, could be the perfect solution for you.

The problem you face when starting off in business on your own is to get investors willing to back you.

By definition you don’t have trading history to back-up your confidence and you won’t have / or don’t want to offer personal assets to guarantee the debt.

On the other hand an investor knows that funding a startup is high-risk. Most start-ups fail after all.

The SEIS, a little known scheme set up by the former chancellor attempts to solve these problems by giving the investors large tax reliefs from the outset and also providing further tax reliefs as compensation should the business fail.

Who can use this scheme? Just about any start-up or company that has been trading for less than 2 years with few exceptions.

Who can invest? Just about anyone as long as you’re not an existing employee or own 30% or more of the company i.e. You (That rules out your spouse, mum, dad and children too by the way) But friends can invest- up to £100,000 if they have the cash and the tax bill. So can wider family – brothers and sisters.

What do Investors gain? 50% of their investment can be offset against their tax bill straight away even though they have to hold the shares for 3 years. So that £100,000 investment allows the investor to reduce his tax bill by £50,000.

Should he sell his shares after the 3 years have expired, there is no capital gains tax. Should the business be profitable our investor will also be eligible for dividends.

And what if the business fails? The Investor can claim a further relief of his marginal tax rate multiplied by the amount of his investment less the tax he has already recovered. To explain that – our investor above has invested £100,000 and claimed back his £50,000 relief. Should the business fail he, as a higher rate tax payer, can reclaim 40% of £50,000 (£100,000 – £50,000) or £20,000.

If there is a better way to fund your startup, Assured FD Services is unaware of it.

Interested? Contact Assured FD using our contact form or email info@assuredfd.co.uk

Assured FD Services

Phil Hall No Comments

Cash Flow Forecasting – or how to survive the recession.

The oil price has been plummeting – have you noticed? A barrel has lost about 15% of its value in the last few weeks and there’s more to come we feel. The one positive about the plight of Greece and the Euro is that we will shortly all see lower prices at the pumps.

All of which reminds me of my first FD job in the 1990s. I had become Finance Director of an Oil Company, just as Iraq invaded Kuwait. Then as now the price of oil was affected by events not related at all to supply and demand and had started to rise sharply – anticipating a war. I realised very quickly that this would have a major impact on our cash flow and eventually our Bank facility. We were a highly leveraged MBO and cash was tight.

I spent my first few months preparing – then revising – daily cash flows, several at a time allowing for ever higher oil prices. In the event Bush declared war and the oil price dropped like a stone!

So a waste of time? Not at all. Like every well-run company we were well prepared. The benefits were clear

1. We gave ourselves time to devise an action plan to preserve cash.
2. We informed our Bank in good time thereby avoiding last minute shocks for them – and as we know BANKS HATE SURPRISES.
3. We came across as thoroughly professional – something that would have been hugely beneficial if we had got into difficulty.

All of which brings me back to the current day and recession. With sales dropping but bills still to pay. Maybe stock levels at pre-recession levels. Customers taking longer to pay, Suppliers tightening terms and Banks unwilling to increase support. Never has it been more important to predict cash levels by forecasting.

I always begin a new assignment as part-time Finance Director with a forecast. If you feel you too could benefit from a more professional approach to your finances – call me now. Don’t wait until its too late!