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’ 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 owners’ 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. 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 thus 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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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 three to 12 weeks 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.
Other points:
Pension-led funding does not require regular management accounts, personal guarantees or charges over domestic property. Instead it looks to unlock value from overlooked assets such as intellectual property rights which can include patents, copyrights, designs, trademarks or even company databases.
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.
Compare our cost:
Download the accountingWEB free guide to alternative finance to check out how our costs compare to other forms of business funding: pensionledfunding.com
Top sectors:
- Advertising / Marketing & PR
- Digital, Creative inc Apps
- Entertainment & Media
- Financial Services & Insurance
- Franchising
- Healthcare
- IT Hardware
- Recruitment
- Software & Support
- Telecoms & Internet
Funding:
- Working Capital
- Franchising
- Director Loans
- Replace Existing Debt
- Refinance
- Growth & Restructure
Business stages:
- Start up
- Early stage - pre revenue
- Early stage - with revenue
- Growth
- Established
- Pre-flotation
- Project
- Reorganisation / Phoenix
- Acquisition
There's even IP value in finance
Commercial finance broker Adrian Dadds was so impressed with the concept of pension-led funding he not only recommended it to his clients, but put his money where his mouth was and used it to fund his own business.
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