What is Pension-led funding?
A popular way of securing finance for a business is generally referred to as ‘Pension-led funding’. This involves transferring some or all of a business owner’s pension savings into a special type of arrangement known as a SIPP or SSAS. These are pensions that are substantially controlled by the individuals that own them. They have a much broader set of investment powers and can, amongst other things, invest in the business owner’s own business.
How does it work?
Typically this is done either by the pension granting a loan to the business, which must be secured, or by the pension purchasing an asset from the business and leasing it back or purchasing equity in the company. Either way, the pension then becomes a significant investor in the business.
Rules and Regulations
There are many rules surrounding these types of pension investment and it is vital to obtain advice from appropriately authorised, qualified and regulated providers such as pensionledfunding.com. Nonetheless, Pension-led funding has provided both start up and growth capital for thousands of business owners and continues to grow in popularity.
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Frequently asked questions
Tom Whitlock answers some FAQs from the introducer community.
A big thumbs up for Pension-led funding from Introducer Laurie
The Commercial Finance Packager who recommends Pension-led funding because he went through the process himself. “I’ve got the opportunity to make the money work. I would rather the interest goes back to my pension than to anyone else.”
A largely un-tapped source of finance for Laurie’s clients
Mark takes advantage of a prime opportunity to earn extra commission
Recommendations don’t come much stronger than from someone who has used the product themselves. “I send qualified referrals to Pension-led funding and get paid up from for any marketing I have put in place to find business.”
Why Mark Redman refers clients to Pension-led funding
Used for:
Pension-led funding can provide bespoke alternative funding options for businesses looking to raise capital for a variety of reasons. Once the funds are introduced into your business you can use them in any appropriate way, whether to invest in new machinery or software, recruitment, a franchise business, growth or expansion, to provide working capital or as part of an exit strategy, the choice is yours.
How long to arrange?
Depending on the source of the pension funds it can take anything from to receive the funds into the business account. There will always be a comprehensive fact find and advisor meeting, but with a motivated client deals are commonly completed within two months.
What to watch out for:
There are no upfront fees for the consultative phase of Pension-led funding. If it transpires this type of funding is not appropriate for your situation, there will be absolutely no charges.
| Company type | Limited companies, LLPs & PLCs |
|---|---|
| Requirements | Directors combined pension funds £80,000+ |
| Level of funding | Up to 65% of combined pension values |
| Security | Secured and unsecured options available |
| Repayment timescale | Up to 5 years, no early redemption penalties |
| Uses | Any commercial reason, including start-ups |
| Interest rate | Flexible as all interest accrues back in the director’s pension funds |
| Application process | Simply email over contact details. Let us do the rest. |
| Speed of decision | Fully costed proposal sent over after face-to-face meeting |
| Timing of cash | 4-12 weeks from first contact to cash in the business |
| Repayment options | Monthly repayments, interest only or capital + interest. |
| Service for clients | Dedicated consultant throughout the process and for the life of the relationship |