Alternative Finance for Start-Ups

It has been in the news in recent months how the level of self-employment and that David Cameron is fully backing entrepreneurialism urging, “more people to make a job rather than take a job”, with Vince cable backing this up, “self employment grows into small companies, small companies grow into large companies.” In fact, Britain’s SMEs account for £1.6 trillion of national business turnover – more than the FTSE 100 put together.

Armada Finance, an independent asset funder, based in Exeter and established for nearly forty years, appears to be one of the only lenders in the market still actively supporting start-up SMEs and franchises, regardless of the sector they are in and the equipment they require. In fact, staff are reporting a significant rise in enquiries through the Armada website and from brokers, for new start businesses. Armada offers an alternative option to bank loans and overdrafts that entrepreneurs need to be aware of. The product is simply a finance lease agreement for equipment from £1000 uo to £25k on terms up to 3 years. Armada pays the supplier invoices and the borrower pays a fixed monthly rental for the agreed term.

Asset Finance is particularly important for start-ups as finances are usually stretched. It’s a helpful and popular option simply because the money to pay for the equipment doesn’t have to be found upfront, thereby protecting cash flow. There are also significant tax benefits in many cases. Because Armada looks at each case individually, carefully assessing every situation there is no restrictive cap limit on the amount it is willing to lend just because it’s a start-up, unlike most other lenders.

Founder and Managing Director Kirk Smith said: “When starting Armada all those years ago in the South West of England I concentrated on supporting the tourism and hospitality industry, which received little to no support from the government of the day or the banking sector. My relationships with entrepreneurs in this vital area of employment and wealth creation for the region stood me in good stead. Supporting people through a relationship and an understanding of them and their business enabled Armada to grow to the point where we now support all industry and commerce throughout the UK.

In many sectors of business the banks still do not have an appetite to support, however with our ethos of putting people before numbers of tick boxes our niche position is enabling significant numbers of people, who have ideas and energy to start businesses and offer employment to workers who have come from the public sector and larger employers who are downsizing. The UK has always needed the entrepreneur. Where would we be if there had never been support for Richard Branson, Alan Sugar or James Dyson?”

Recently, Armada has supported a number of new start restaurants and hotels all over the UK who have struggled to get funding elsewhere simply because of their sector. All the catering and kitchen equipment required for the opening of the first UK branch of a US fresh American dining franchise in Cardiff last summer totalling £175k and a Japanese restaurant and bar opened in Liverpool where Armada funded the complete fit-out.

Armada has also funded new play centres, gyms, healthcare businesses and food manufacturers – a supplier to the Jamie Oliver Group, based in Cardiff, is a recent client. Armada also frequently is asked to fund more unusual or specialist equipment that mainstream funders tend to shy away from - £50k of laser technology for a new Laser Clinic in London is a perfect example. “We are delighted to contribute to the success of every new venture we support and it’s exciting to see entrepreneurs’ visions become reality and watch a business develop. Every day, businesses are able to open their doors due to our support.”

The process for providing funding to a start-up at Armada is just as fast and simple as it is for an established business. Entrepreneurs have so much to think about when setting up a business, taking the stress out of finance and making it simple is of great value.

Obviously, there are no trading history financials to assess, so instead Armada takes a view by looking at business plans, projections and personal bank statements. It’s also very helpful to know the background of the people involved so a complete picture can be built. Generally, prospective clients need to be homeowners, but if their proposition is strong, non-homeowners can still get funding if a relative or friend will act as guarantor.

Britain needs to step up its love and support of our new and established small, local, independent businesses to help them prosper.

It is the multitude of small independents that, given the support, can create significant employment and be the engine to drive the economy forward.

To discuss finance options, please contact Richard Gelsomini of Armada Finance on 07815 937315.

This article first featured in the February 2011 edition of Business Start-up magazine.