Case Study 5

This was a start-up company in the South East who wanted to develop a new kind of Access Control Unit using the BT Network. This would require extensive funds to develop the unit and get the neccessary BABT Approvals

Design: Net Communications

Hosting: Consult-X Limited

Assignment Brief
To help develop the Business Plan, ascertain funding required and raise the agreed funding. The Director had no funds or assets to provide security as he was fully pledged in other businesses already.

The Assignment
The Business Plan was drafted and detailed budgets were done revealing a final funding figure of £80,000. Our intention was to fund the whole of this under the Small Firms Loan Guarantee Scheme however the Bank indicated that they would be looking for either a personal committment from the Director/Shareholders of £15,000 or an equivalent sum from a Private Investor. The Investor was found and following detailed discussions and the usual "due diligence", HSBC agreed to support the company with a further £65,000. The Bank then put the scheme to the DTI for sanction.

The Outcome
A combination of £15,000 Private Equity Funding and £65,000 unsecured loan raised using the Governmentís Small Firms Loan Guarantee Scheme through HSBC. The loan was agreed over a term of 5 years fixed at a rate of 2.5% over Base plus the 1.5% DTI premium, and a drawn down in two tranches. We also negotiated an initial 12 month repayment holiday to ease the clients cashflow in the early stages of the business.

N.B Subsequently we negotiated another £10,000 Private Equity Funding and a further £10,000 SFLGS to cover some overspend on expense.