Case Study 3

This was a new company that wanted to provide data back-up and recovery services for small to medium sized businesses. They would do this by setting-up off-site automated data back-up and recovery facilities which would make contact with the client's computer at a predetermined time and transmit the data to a central station via modem over standard telephone lines or ISDN. The director had spent 18 months researching, developing, and writing software for the service.

Design: Net Communications

Hosting: Consult-X Limited

Assignment Brief
To develop the existing Business Plan, ascertain funding required and raise the agreed funding. The Director had no funds or assets to provide security, but came to us with a Private Investor who was willing to put-up £40,000 if we could raise the balance as an unsecured loan.

The Assignment
The detailed budgets were reviewed and revised and the final funding agreed at £145,000. There was already the £40,000 pledged by the Private Investor, so negotiations were opened with several Banks to support the company with finance using the Small Firms Loan Guarantee Scheme. Following detailed discussions and the usual "due diligence", Barclays Bank agreed to support the company with a further £85,000 if we could raise another £20,000 privately. As this had been foreseen, we already had another Private Investor interested, so he agreed to put-up the remaining £20,000. The Bank then put the scheme to the DTI for sanction.

The Outcome
A combination of £60,000 Private Equity Funding and £85,000 unsecured loan raised using the Governmentís Small Firms Loan Guarantee Scheme through Barclays Bank. The loan was agreed over a term of 5 years fixed at a rate of 10% including the 0.5% DTI premium, and a drawn down in three tranches. We also negotiated an initial 12 month repayment holiday to ease the client's cashflow in the early stages of the business.