SME Funding
SME Funding
All businesses at some point in their life cycle will require funding. Whether you need funding to fit out your premises, hire plant and machinery, employ sales staff, improve cash flow, purchase a premises or improve your existing business through mergers and acquisitions there are funding options available to you. The different types of funding options are listed below.
1.Leasing
This is where a finance provider enters into an agreement with you to lease or rent goods/services in which you require to you for a set period of time. With leasing, you never own the asset although there may be an option to buy the product outright in a bullet payment at the end of the lease term. Leasing is most suitable for start up companies who have limited trading history or audited accounts.
The lease repayments are generally more expensive than a finance agreement/Loan. An initial down payment of your funds is not usually necessary.
The lease agreements are treated as an expense for accounting purposes and the goods that are leased are never classes as an asset to the company. The Lease provider always owns the goods.
The lease agreements can range from €1,000 upwards. Both banks and non-bank lenders can provide this service to you. Below is a list of items in which you can obtain a lease agreement for;
- Office Supplies – Finance for laptops, copiers, printers and software.
- Equipment that is needed to run the business: Garage equipment, Beauty equipment, Cleaning equipment, Manufacturing equipment, Medical equipment, Gym equipment, Catering / Kitchen equipment, Restaurant / Café / Pub equipment, Security systems, Construction equipment, Furniture, Telecom equipment
- Farm Machinery and Plant
- Motor and Fleet Management; Fleet Management means managing a company’s vehicle fleet. This includes commercial motor vehicles like trucks, vans and cars with the aim of getting the best of out of it. Fleet Management includes functions like vehicle maintenance, driver management, fuel management, safety management and it allows companies to manage their fleet during all the transportation process. Nowadays, fleet services are designed in order to minimize vehicle investment risks, reduce transportation and staff costs, improve transport efficiency and increase productivity
2.Finance
This is where you obtain finance by a finance provider (banking/non-banking) for the purchase of an asset. This option differs from the lease agreement as you actually own the goods once you enter into the agreement. It is in effect a term loan for goods/services which you want to purchase. It is slightly more difficult to obtain this option as you need trading history/audited accounts, a secure and well-paying job etc in order to qualify. You also will need an initial down payment in order to acquire the funds.
Below is a list of goods that are most suitable for finance;
- Motor Finance– obtaining a loan for the purchase of motor vehicles
- Invoice Financing –This is where a finance provider will buy sales invoices off you at a discounted price. It is used in times of cash-flow shortages.
- Cash-Flow – This is where you can obtain funds to purchase stock, hire sales people for anything that is going to improve your business and get you through a few tight months.
- Equity – This is where you can obtain finance for management buyouts, management buy-ins, acquiring other businesses etc. This is only available to medium sized SMEs with earnings in excess of €500k and with growth potential. The Finance available here ranges from €1m and €3m for businesses typically worth €3-10m.
If you would like to find out more about any of the above finance options, please fill in the details below.
3.Commercial Property
This is where you can obtain finance for to acquire Land or buildings for business use – for example: Office Spaces, Warehouses, Factories etc. It does not apply to residential property investments (see below).
The Finance available ranges from €250,000 to €10 million from non-bank lenders
- Up to 70% loan to value is available. This means that you need to have at least 30% of the value of the property yourself in order to qualify for the Loan/Finance.
- The asset must be income generating.
4.Residential Investment Property
This is where you are looking to obtain finance for a house(s)/apartment in order to rent it out/sell it at a future date and make a income/profit on the property. These are also called “Buy to let mortgages”.
The finance available for this option ranges from €40,000 to €1.25m.
There are 3 finance options for a RIP (Residential Investment Property);
(A.) Individual Investors
- This is available to individual investors who wish to purchase or refinance Residential Investment Properties valued from €80,000 upwards
- The minimum loan is €40,000 and the maximum loan is €1.25m
- The minimum age of the applicant is 21 and the maximum age on maturity is 75
- The minimum annual income is €40,000 per single/joint application
- There is a maximum number of 4 applicants on any one property
- 5 to 15-year terms interest only repayments
- 20-year term capital and interest repayments
- 35-year term flexi mortgage giving 1 to 10 years interest only repayment with capital and interest repayment on the remaining term
- Up to 70% loan to value is available on loans of up to €1m. This means that you will have to have funds worth at least 30% of the total value of the property purchase
- Up to 65% loan to value is only available on loans from €1m to €1.25m
- The finance providers tend to lend to investors who are looking at RIPs in Dublin and surrounding counties, Kildare, Wicklow, Meath, Louth, Galway, Cork, Limerick and in other urban centres with population greater than 10,000 people.
- There is an ICB (Irish Credit Bureau) check required on all applicants.
(B.) Company Investors
- This option is available to company directors who wish to purchase or refinance Residential Investment Properties (RIPs) valued from €80,000 upwards.
- The Minimum loan €40,000, maximum loan €1.25m
- 5 to 15-year terms interest only repayments
- 20-year term capital and interest repayments
- 35-year term flexi mortgage giving 1 to 10 years interest only repayment with capital and interest repayment on the remaining term
- Up to 65% loan to value is available on loans up to €1m
- Up to 60% loan to value is only available on loans from €1m to €1.25m
- The finance providers tend to lend to investors who are looking at RIPs in Dublin and surrounding counties, Kildare, Wicklow, Meath, Louth, Galway, Cork, Limerick and in other urban centres with population greater than 10,000 people.
- ICB (Irish Credit Bureau) check required on all shareholders.
(C.) Pension Investors
- This is where an individual can purchase, or refinance Residential Investment Properties valued from €80,000 upwards on the strength of his pension fund.
- Minimum loan €40,000, maximum loan €500,000
- 5 to 15-year term interest only repayment option and 5 to 15 year term capital and interest repayment option.
- There is only a maximum of 50% loan to value. This means that the individual must have at least 50% of the purchase price of the property in his pension pot.
- The finance providers tend to lend to investors who are looking at RIPs in Dublin and surrounding counties, Kildare, Wicklow, Meath, Louth, Galway, Cork, Limerick and in other urban centres with population greater than 10,000 people
- This is Non-recourse lending as there is no ICB (Irish Credit Bureau) check required on the individual as the loan is to the pension trustees.
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