finance in cornwall 2014 segment 1

FFinance in theCornwall 2014

As business confidence returns…

Scott Bentley- Partner

www.francisclark.co.uk

Presenters and other participants

…and more

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Structure of morning

• Background and Grants intro (8.30am to 9.35am)

• SME, LEP, Cornwall EU millions and the ‘funding gap’

• Grant schemes (Overview)• Video from Matthew Hancock (Minister for

Skills and Enterprise)

• Grants, debt, equity and business support – stratified by size* (9.55 am to 11.00 am)

• Banks, alternative sources of finance and business support (11.20 am to 12.25pm)

• Q&A one to one / Networking (12.25pm to 1.45pm)

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Facts, figures and words – scene setting

• “Bank of England data showed that lending to companies of all sizes fell in the three months to February on a year earlier despite calls by chancellor George Osborne for businesses to boost growth by investing more.” (Guardian – 22 April 2014)

• Supply or demand? – “What's more, seven out of 10 applications for business finance are approved so there's rarely been a better time to approach your bank.“ Richard Woolhouse, the BBA's chief economist (Guardian – 22 April 2014)

• “the finance gap could be between c£84bn and c£191bn over the next five years” (Boosting Finance Options for Business, March 2012).

Bank of England: trends in lending April 2014

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Facts, figures and words – scene setting

How parts of Britain are now poorer than POLAND with families in Wales and Cornwall among Europe's worst off (Mailonline 5 May 2014)

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Facts, figures and words – scene setting

• “Cornish people granted minority status within UK” (BBC News 24 April 2014)

• Treasury to “take seriously” Cornwall bid for EU spending autonomy (WMN 1 May 2014)

• “Cornwall to get €592.9 million in EU cash between 2014-2020” (The Packet 29 June 2013)

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Facts, figures and words – scene setting

Business Confidence index… just short of survey high... (

http://www.francisclark.co.uk/news-views/blog/business-confidence-high-on-the-menu-at-breakfast-meeting/)

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“Small biz is fire power of UK”

“Small biz is fire power of UK” – in a tweet from Matthew Hancock, Minister for Skills and Enterprise, 6 May 2014

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Barriers to growth?

Skills

Infrastructure

Confidence (lack of)

Access to Finance…

Jenny Milligan

Commissioning & Partnership Manager

ERDF Convergence

Finance in Cornwall2014

Chris PomfretChairman of Cornwall & Isles of Scilly LEPwww.cornwallandislesofscillylep.com

Why? 

Kim Conchie, Chief Executive, Cornwall Chamber of Commerce

Finance in Cornwall 2014

Source: The Telegraph, 24th April 2014

Finance in Cornwall 2014

Cornwall Chamber Survey April 2014: The Issues

• Banks give no One-to-One support

• ‘We have to a have a bigger turnover to have a bank manager’

• ‘They’re not interested in lending’

• ‘I don’t want to risk my house as collateral’

• ‘They don’t understand my business’

• They are not sympathetic to my cash flow problems

Finance in Cornwall 2014

British Chambers of Commerce Policy Unit 24.4.2014: The Solutions

• Financial institutions need a 20 year plan to restore relationships, transparency and trust

• More competition in the business banking sector needed

• In addition, a strong British business bank willing to take risks where banks cannot in an era of tight regulation and capital requirements

• A retail SME Bond Market, more mezzanine finance and equity all have a stronger role to play for growth businesses

Grants - Overview

David Armstrong – Corporate Finance Director

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All change!

• European Programme 2014 - 2020 – c£520m

• City Deal

• Assisted Area

• State Aid

• c500 grant schemes

• BUT - SME funding gap remains!

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Our successes

• £12m of grant unlocked £36m of other funding

• Create 840 and safeguard 640 jobs

• What makes a good grant application?

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So, what is available?

State Aid + Size Eligibility and level of grant

National

Regional

Local

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Regional Growth Fund

• Programmes – Cornwall Marine Network, Assisted Asset Purchase Scheme, PWGF2 etc

• Projects – direct applications for >£1m

• RGF6 opens Summer 2014

• Competitive process

• Create sustainable private sector jobs

• Roadshows

• ‘Where is our missing £90m?’ – WMN May 5

• http://www.gov.uk/understanding-the-regional-growth-fund

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City Deal

Headlines

• £300m (£34m public sector)

• Unlock commercial opportunities in marine sciences, renewable technologies and to boost exports

• Plymouth and South West Peninsula

• Conversion of South Yard at Devonport Naval Base

• Young People

Business support and grants, including:

• GAIN

• Innovation Vouchers, MAS and UKTI

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Cornwall Development Company

• £17.6m of funds

• BIG Vouchers

• Rural Business Investment – grant of <£25k for agri-food businesses

• Business Innovation Fund – grant of <£50k towards new products and services

• Other schemes

• http://www.cornwalldevelopmentcompany.co.uk/investment-funds

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Keeping up to date

• Website, fact sheets, seminars, blogs:

• http://www.francisclark.co.uk/news-views/blog/coastal-communities-fund-seconds-away-round-3/

• http://www.francisclark.co.uk/news-views/blog/a-city-deal-of-300m-cutting-through-the-smoke-and-mirrors/

• http://www.francisclark.co.uk/news-views/blog/bif-bang-innovation-fund-for-smes-live-in-cornwall/

• http://www.francisclark.co.uk/news-views/blog/why-do-we-need-grant-advisors/

Investment ready… finding the match

Richard Wadman – Corporate Finance Director

www.francisclark.co.uk

Matching requirements

Understand your

requirements

Understand funding

options and funders

requirements

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The Readiness Process

• When, why and what funding is needed

• Communicating the business proposition - Business plan and projections

• Viable plan and credible management

• Building the relationship

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Investment ready – housekeeping

• Compliance and Legal

Licences / contracts/ legal title?

IPR ownership in the company?

Statutory Accounts/management accounts

VAT, PAYE/NI, Books and records in order?

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Requirements: Grants

• “Project” eligibility – sector, size, location…

• Timescale – prescriptive, process and panels, not retrospective

• Match funding

• ‘Need for grant’ versus viable proposition

• Other factors - Environment, Equality, on going requirements

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Requirements: Debt

• Serviceability & Headroom

• Security / Personal Guarantees

• Conduits for government initiatives

• Covenants – achievable / appropriate?

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Requirements: Equity

• Exit route and returns to the investor

• Investors expertise vs. loss of independence?

• Be prepared to discuss valuation

• Be aware of FSMA regulations

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Investor Ready - Conclusions

• Appropriate funding / understand the funder

• Business Case

• Plan B?

• Know the ‘deal breakers’ – due diligence

• Build in extra time

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Grants

Factors contributing to a successful application…

1. Project

2. Eligibility

3. Robust Business Case

4. Business Plan (and Financial Projections)

5. Dialogue with fund holders

6. Understanding their requirements: strategic and operational

7. Need for grant

8. Patience/ Completeness

9. Understanding timelines

10. Match funding – seldom 100% intervention and seldom pay in advance of defrayal

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BreakSession 2 start time

9.55am

Screen 1 (“Early stage”)

Screen 2 (“Developed”)

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