Taking the Fear out of Loan Finance

Raising Loan Finance to Develop Your Organisation

13th December 2011

Roy WhiteNW Regional Director

The Social Enterprise Loan Fund

A different approach?

Grant v SustainabilityShackles v Freedom

Short Term v Medium TermDirection v Making a Difference

Making the LEAP! from Grant Application to Loan Application

Differences and Similarities

Common Purpose – to raise money!

Grant ApplicationsRigid StructureConcentrates on “outcomes”Needs to demonstrate “fit” with national and local policy

Both require a Business Plan

Loan provides more “freedom” for the organisation’s “spirit” to come through, although basic content is fairly constant

Identify common elements of both – as you complete the grant application, write them down so that you can more easily translate them into the Business Plan

Ensure consistency between grant application business plan and financial forecasts

Provide a lender with a copy of the grant application, but don’t anticipate a decision on that alone!

The Business Plan for Loan Application

Style

•Written with the intended reader in mind•Simple to read•Not too long •Avoid jargon•Use appendices•Understand what a potential lender is looking for

Introduction / Background Information

Executive SummaryHistory of your organisationLegal Structure of your organisation – Company Limited by Guarantee? Registered

Charity ?What your organisation doesWhere it is basedWho are the key playersWhat funding is being requested and whyWho are the other parties?Brief Financial HistoryBrief ForecastHow much £££££ are you asking and how long do you want pay it back over!

Market

What is your marketplace?

Local issues/Local needsWho are your customers?How will you find your customersHow do you know that a need exists? Evidence – market research?What is your competition (today and in the future)?How will you protect yourself from it and maintain your position?

Who are the People Involved

Brief background of all relevant management team and other key personnel

Include, qualifications, work experience in all sectors

Management Structure Chart, showing how the organisation works together,

reporting lines, responsibilities

Financial Analysis and Forecasts

Track Record!Commentary on past three years trading performance

Highlight key facts and figures – draw attention to fluctuations. Get the explanations out front!!

Cashflow and profit forecasts (at least 12 months)

Commentary on any differences between historic and forecast future performance – where is the growth coming from?

Breakeven Point?

Facilities Required

How much is required?

Structure of funding required?

Loan, overdraft, invoice factoring, etc?

Security available to lender?

Personal Guarantees?

Affordability

•Cashflow forecasts to include capital repayments and interest•Any capital holiday period required?•Ability to absorb increased interest rates?•Ability to weather downturn in turnover?

SummaryVery briefRestate the positives

Appendices

Historic accounts

Cashflow, balance sheet and profit forecasts

CV’s/Profile

Information sheet – details of current bankers, accountants, solicitors, etc., including addresses and telephone numbers, governance documents

Historic bank statements

Property valuation reports (where appropriate)

Marketing literature/brochure

Banks CDFICredit Score Credit CheckSecurity security

Time TIMEProfitability BreakevenShareholders Social Enterprise/Charity

Differences

The Social Investment

Business

Future Builders

Full Investment

Fund

Consortia Fund

Cash flow Fund

Tender Fund

Social Enterprise Investment

Fund

Growth Fund

Outreach Fund

Innovation Fund

Collaboration Fund

Tender Fund

Emerging Enterprise

Fund

Right to Request

Fund

Community Builders

Fund

Development

Feasibility

Investment

Modernisation Fund

Government backed National Schemes

Co-operative & Community

Finance

The Social Enterprise Loan

Fund

Commercial banks

Charity Bank

Triodos Bank

Unity Trust BankCharities, Social/Community

Enterprises, Co-operatives

Independently run Finance Organisations

.

Does your social enterprise meet our criteria?To be eligible for a loan from us your enterprise must be a social enterprise with a charitable purpose.What is a social enterprise?Social enterprises have a primary purpose to pursue a social or environmental goal (as opposed to being purely or mainly profit driven).In addition, they principally reinvest any profit or surplus that is made in the organisation or community to further the social or environmental goal.What is a charitable purpose?The Charity Commission provides detailed guidance on what is a charitable purpose. Please follow this link to the Charity Commission website.We are especially interested in receiving applications from organisations active in theprevention or relief of povertyadvancement of educationadvancement of health or the saving of livesadvancement of citizenship or community developmentadvancement of the arts, culture, heritage or scienceadvancement of amateur sportadvancement of environmental protection or improvementrelief of those in need, by reason of youth, age, ill health, disability, financial hardship or other disadvantage.If the loan you are seeking will help deliver any of the eight things listed above, we would like to hear from you.

Roy WhiteNW Regional Director

The Social Enterprise Loan Fund

Tel: 01829 261019 Mob: 0794 1284299

Web site : www.tself.org.uk

The Social Enterprise Loan Fund is a company limited by guarantee registered in England: Company No: 2995859

Registered Office: IBEX HOUSE, Third Floor, 1-5 Wandsworth Road, Vauxhall, London SW8 2LN

The Social Enterprise Loan Fund is also a Registered Charity No: 1042514