Raising finance for your business has not been easy over the past few years; however it would seem that the economic climate in Ireland is starting to change for the better. There is a general consensus that the public is starting to have confidence in the market place again, which is positive news for start-up and existing businesses.
We have assisted many of our clients, at various stages of their development, to apply for and obtain finance from several different sources. From this experience we have put together a summary of the various options available to you, which we hope will be helpful for either your start up or existing business.
1. Microfinance Ireland
In need of raising finance of up to €25,000 and unable to source funding from the bank? Microfinance Ireland is an incentive which is funded by the Irish Government and was created to assist newly established and growing small businesses to obtain finance. The 3 main conditions you must meet before you apply to Microfinance Ireland are as follows:
- Turnover of under €2 Million
- Less than 10 employees
- Have been declined finance by a bank.
Microfinance Ireland are offering unsecured loans of between €2,000 and €25,000 with an interest rate of 8.8% APR (at 29th October 2013). To avail of this finance you will need to complete an application form and forward it to Microfinance Ireland, along with the following supporting documentation.
- A Business Plan (see our recent Top 5 Tips for Setting Up Your Own Business)
- 3 Year Cashflow Projections
- Summary Profit and Loss
- Bank decline letters
- Last 6 months bank statements
It may be advisable to obtain professional advice when preparing some of the above documentation as they can be complex in nature and you want to get them right.
2. Enterprise Ireland
Enterprise Ireland (EI) is a government organisation whose aim is to assist the development and growth of Irish companies in the world market. EI offer various forms of support to Irish companies, one of which includes financial support.
When dealing with EI you will be appointed a development advisor depending on the stage of your business (start up, established or high growth) and your industry.
Some of the financial supports available from EI include:
High Potential Start-Up (HPSU) Feasibility Study Grant
This grant is aimed at new start-up companies or entrepreneurs looking to research the potential of an export orientated business. The funding will be used to determine if the business is viable and to prepare the business plan for the development and launch of the product or idea. To be eligible for this grant your proposition must be:
- Based on an innovative technology or service
- Likely to achieve significant growth over a three to four year period
- Export orientated
- Driven by an experienced team
Funding of 50% of the eligible expenditure, to a maximum of €15,000 is available under this scheme.
EI also works closely with the various County and City Enterprise Boards (CEB’s). Priming Grants are available to sole traders, partnerships or companies that meet the following criteria.
- Your business must be within the CEB’s geographical area
- You may or may not have met the criteria for funding from EI
- You must employ up to 10 people
- You must be a manufacturer or a service business trading internationally; or
- A domestic service business with the potential to trade internationally; or
- A domestic service business established by a woman returning to the workforce.
The grant is receivable within the first 18 months of setting up your business with the maximum grant available being 50% of the investment or €150,000, whichever is the lesser.
Business Expansion Grants
This grant is again run in conjunction with CEB’s which is aimed at existing businesses The conditions and funding are in line with the above priming grant, however it does exclude a service business established by a woman. If you have availed of the priming grant you will not be eligible for the Business Expansion Grant until 18 months after the approval or drawdown of your priming grant.
A maximum grant of €20,000 or 50% is available to businesses in the Southern and Eastern (S&E) Region, with grants of €20,000 or 60% available to businesses in the Border, Midlands or West Regions.
3. Irish Government Funding Incentives
Start Your Own Business (SYOB)
SYOB is an incentive introduced by the Irish Government in the 2014 budget. This incentive is aimed at those who have been unemployed for over 15 months and are setting up their own sole trade. While there is no up-front funding with this incentive it will provide you with a saving as income earned under €40,000 will be exempt from Income Tax for the first two years.
If you are setting up your own business, you are going to need a good team around you. Jobplus is another incentive from the Irish Government which provides financial support to you, as an employer, if you employ someone who has been on the live register for in excess of 12 months. For more details on this incentive see our blog – Jobplus, The New Employer Incentive Scheme.
4. Bank Finance
Bank Finance has been proving difficult to obtain in the past few years, however all banks are promoting that they are lending so why can’t you get your hands on this money. Before you approach a bank you will need to have done your homework and have prepared a good business plan.
As mentioned above last week’s blog outlines what should be contained in a good business plan. Some of the further documentation required from a banking institution may include:
- Financial and/or Cashflow Projections
- Tax Clearance Certificate
- Most recent Financial Statements
- Details of security available, if any.
- Evidence of your past profitability
- Evidence of your management team’s ability to adapt to changing conditions
- Evidence of your good credit history
5. Raising Equity
If you are a limited company with share capital a further way of raising finance is to issue shares. As with a banking institution you will need to develop a good business plan to present to your potential investors. The biggest downside to issuing share capital is that you will be diluting your own control and shareholding in the company, however would you rather an 80% share in a successful company or a 100% share in a failed company?
As we said at the outset raising finance is never easy but there are options available to you. Your business plan will be key to the success of obtaining finance from your chosen source so make sure it is of a high quality and that will ensure it stands out from the crowd. Make them want to give you their money!
If you require any assistance with preparing your business plan please do not hesitate to contact a member of our team. We have many years of experience in assisting our clients raising finance.