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AIB TO THE RESCUE

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The only thing more stressful and daunting to new business owners than an unexpectedly large bill landing on your office doormat, is that time of year when the “I know it’s going to be large, but maybe if I pray really hard it won’t be” barrage of annual bills come flying in. This year, AIB have come up with two new solutions to this common problem that might leave you imagining the logo wearing a cape.

For most business owners, the worst evil of annual bills, is their size and the fact that they need to be paid all at once. Without an enormous stockpile of gold in your basement, these bills can often loom over you and cause an unwanted interruption in your cash flow and savings potential. This is where AIB can step in (cue the superhero soundtrack) with their new Prompt Pay and Insurance Premium finance options.

As part of AIB’s ‘Backing Brave’ initiative, Prompt Pay and Insurance Premium are two newly announced short-term financing products designed to take the sting out of annual bills. The Prompt Pay product covers all large one-off payments – apart from Insurance payments, a shortfall which is picked up by the Insurance Premium product to assist both AIB and non-AIB customers manage their monthly outgoings.

These Prompt Pay loans must be a minimum of €5000 and be paid off within 11 months. Prompt Pay can assist customers with outgoings such as:

  • Preliminary tax
  • Pension contributions
  • Commercial property rates
  • Subscription fees to professional/trade associations
  • Annual audit fees

The greatest bonus for business owners in undertaking these loans is that both are offered at a fixed interest rate. This offers the peace of mind of knowing the cost of your monthly repayments in advance. The ability to spread these usually all-in-one costs over a period of 11 months can assist you in budgeting for the year ahead and help you to manage your cash flow without these lump sum interruptions. The only extra cost incurred here is a documentation fee of €63.49 which will be charged with your first repayment.

Both Prompt Pay and Insurance Premium proclaim themselves as easy to set up through your local branch. Should you have any concerns or wish to gain advice on your eligibility and finances in general don’t hesitate to contact us here at DCA Accountants.

VENTURE CAPITAL FUNDING

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Venture capital groups have become one of the most popular methods of gaining equity. This method has become so popular of late that Irish Venture Capital Companies have become one of the primary sources of funding for SME’s.

The purpose of venture capital groups is to provide equity to growing start-ups.  These groups may also act as a mentor of investment as they often provide essential advice to the companies in whom they invest as well as assisting in the expansion of the company.

 

It was reported in February of this year that Venture Capital Funding for SME’s had hit the 400m mark. This is the highest level of venture capital funding seen in over 10 years.  Over 80% of this money was dedicated to the expansion of existing companies. This growth in the popularity of venture capital funding has lead to growing confidence among Irish entrepreneurs.

 

Obtaining venture capital is very different from raising debt or a loan from a lender such as a bank and is an option that should be considered carefully. One of the ways in which this method of funding is unique is that instead of seeking security on their investment, lenders of venture capital will usually charge interest on the loan. Another way in which this option is different is that venture capital is invested in exchange for a stake in your company; creating a symbiotic relationship between the investor and the company they are investing in. The investor’s return is dependent on the profitability and growth of our business.

 

Recent research has shown that Venture Capital backed companies grow faster than other companies. Research has also shown that these companies are more profitable than their peers at a similar level. As well as injecting cash into the business, the investment is also likely to inject the start-up with credibility

 

So, is Venture Capital a viable option for your company?

Venture Capital is the best option for you if you are hoping to rapidly grow your company, and have the ability to protect your intellectual property throughout the investment period. In order to appeal to venture capital investors it also helps to have a USP (Unique Selling Point).

 

If you decide that Venture Capital Funding might be for you, you must ensure that your investor has a strong track record, excellent credentials, industry contacts that can help you grow your business and the time to invest in growing your company.

 

There are a wealth of venture capital funds available in Ireland at your disposal. For your convenience we have compiled a short list of those available:

 

  • AIB Seed Capital Fund
  • AIB Start-Up Accelerator Fund
  • Bank of Ireland Early Stage Equity Fund
  • Bank of Ireland Start-up and Emerging Sectors Equity Fund
  • SOS Ventures Ireland Fund
  • Frontline Ventures Fund
  • Delta Partners
  • Enterprise Equity

It is vital to choose the correct investor for your business, as your investors will be some of your most important contacts. Your venture capital provider should be able to provide advice and guidance as well as capital and it should be a relationship that will grow alongside your company.

SBCI LOANS

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Strategic Banking Corporation of Ireland

In March of this year, a new low-cost loan fund was announced by the SBCI. This new fund could see SMEs and the farming sector have greater ease of access to much-needed funds through some of the country’s major banks. As of late March, its board of six directors has been confirmed, taking this from a pipe dream to a very real and tangible option for the growth of smaller Irish businesses.

This fund will offer long-term working capital through major lending institutions. Its purpose is to offer SMEs and the farming sector more flexible products than are currently available to them. They will offer low-cost funding to financial institutions. The idea being that these savings will then be passed on to SMEs. AIB and Bank of Ireland have already signed up as partners.

So what is the SBCI?

The SBCI is the Strategic Banking Corporation of Ireland is a new bank launched in the last quarter of 2014. It is hoped that it will become the primary source of funding for SMEs in coming years with the Government hoping that over €5billion will be made available to SMEs in the future.
The initial funders for this new banking venture are the Ireland Strategic Investment Fund (ISIF), the European Investment Bank (EIB) and the KfW German promotional bank.
The SBCI is a strategic SME funding company with the primary goal of creating access to flexible funding for Irish SMEs. The SBCI aims to:

  • Provide flexible products with flexible repayment options.
  • Provide lower cost funding to major lending institutions to be passed on to SME’s and the farming sector.
  • Create real market competition for new entrants to the SME lending market.

AIB are currently offering customers looking for a new business loan of up to €30,000, an answer within 48hours. They are also offering loans at a 2% discount from their Standard Business Loan Rate. Funding of up to €5m for the growth and expansion of your business will be made available. Their terms will be between 2 and 10 years.

Is a loan with SBCI the right choice for your business?

These loans are open to most SMEs. This form of funding is open to your business providing it meets the following criteria:

  • The company must have a turnover of €43m or less.
  • The company must not be part of a wider group of businesses.
  • The company must have less than 250 employees.
  • The company must have a significant presence in Ireland.
  • The company must have less than 25% of their capital held by public bodies.
  • It is important to bear in mind that your chosen lending body will need to share your information with the SBCI

We would advise consulting with your local participating lending body in order to ascertain your company’s eligibility for this scheme. If you have any queries at all about this fund and how it could benefit your business, please don’t hesitate to contact us at DCA Accountants.