UK’s small business infrastructure: debt vs tax and regulations perspective

Last week I was at a business conference in London. Onstage was a manager from one of the major high street banks. He was justifying the banks position on taking onerous personal guarantees from borrowers.

“We need to protect ourselves from business failure,” he claimed.

I put my hand up and asked him, “as someone who works for a failed business which was bailed out by the tax payer and whose leaders walked away with their fortunes intact having spunked billions of shareholder value, can you not see the irony of your statement?”

He smiled apologetically and took the next question!

Before I founded Funding Nav, when I was running SME trading businesses raising funds was always a challenge and unlike larger companies that have a whole department called Finance and maybe one called Treasury too as well as a myriad of advisers looking to add value the lonely SME leader needs to add fund raising to his long required list of skills.

Apart from a lack of advice and possibly options the SME leader also has less value at their disposal. It always makes me laugh when I hear Government banging on about how the small business sector is the engine of the economy yet they prevail over a situation where larger businesses can borrow at a few points over base and where the CEO gets an enormous salary for taking absolutely no personal risk at all. Whereas in the so called engine in this gleaming example of double standard economic management the leader is saddled with two issues:

1)     Debt costs substantially more than it does larger businesses, often more than twice as much.

2)     It is generally expected and accepted that in the event of the enterprise failing the director(s) will repay the debt even at the cost of their own family home through the signing of rather onerous personal guarantees which totally remove the protection of limited liability from them.

So, the so called highly valued entrepreneurs of our small business powered economy are doubly disadvantaged and sometimes permanently financially crippled by this ridiculous situation whilst the leaders of larger businesses are richly rewarded regardless of their risk exposure and most ridiculously of all the leaders of our banks are able to get the government to underwrite their errors and have the tax payer bail their banks out whilst they continue to draw multi million pound salaries regardless of their errors.

Now, having slagged off the UK’s small business infrastructure from a debt perspective I will say that from a tax and regulations perspective it is one of the best places in the world to equity fund a business, run a business and sell a business. Sometimes, when we are advising overseas businesses on strategy one of the first suggestions that we make is that they incorporate and fund a UK based business and then use that as a holding company to acquire their overseas interests.

The mixture of SEIS, EIS, very advanced crowdfunding and angel networks, low rates of corporate tax, R&D tax credits and entrepreneur’s relief on the sale of an enterprise make the UK unbelievably attractive from this perspective.

So for those lucky enough to have developed an investable business, now is a great time to attract investment. There has never been more money available with so few alternative options.

At Funding Nav we employ a unique entrepreneur centric approach to fund raising. We look first at free sources of capital and partnerships before considering debt and equity. We aim to reduce dilution and risk for fund raising businesses, ensuring that entrepreneurs gain the maximum value for the least risk.

We are looking forward to the BFS Investment Conference so we can meet with as many ambitious businesses as possible in order to help them get the maximum funding for the least risk and cost.

Want to learn more about Funding Nav’s unique entrepreneur centric approach to fund raising and attract best-fit investments for your venture? You can meet Stephen Sacks at our Nov 12th Investment Conference happening at Cocoon Global and get all your questions answered in person. While also learning from hot debates, pitching for funding & networking with top investors & growth support institutions keen to help you grow. Learn more and secure tickets here: https://bit.ly/33cW4RL

Written By Stephen Sacks - Founder of Funding Nav and author of Reboot Your Business

About Funding Nav:

1) We can hit the ground running and can advise on innovative pricing and marketing strategies which are proven to improve both profitability and cash-flow immediately. We are able to help businesses scale by helping them access more new customers on a pay per lead basis.

2) We get you all of the free cash your business hasn't previously claimed including grants and tax rebates as well as drive down all ancillary costs. These strategies have an immediate and positive impact on profit and cash. In the UK alone there are in excess of 8,000 grants and ￡200bn currently available for businesses just like yours.

3) We offer quick, flexible and good value lending from our panel of 300 lenders. We can raise debt from ￡100k to ￡100m and we can package this in the most efficient way. We can access investor visa applicants from China who can lend ￡200k at low rates of interest whilst also helping access into their home market.

4) We help businesses raise equity on either our own or other platforms by creating innovative campaigns that capture the imagination of investors. Our database includes over 17,000 HNW's and family offices. We can raise between ￡250k & ￡10m. We are particularly well connected with Chinese investors. 

Meet Stephen Sacks of Funding Nav at our Nov 12th Investment Conference happening at Cocoon Global. Secure tickets here: https://bit.ly/33cW4RL