The North East Microloan Fund
Peter Gilson
Fund Manager, Entrust
26th June 2012
Entrust: who we are…
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Small group of companies, not for profit, limited by guarantee:
– Tyne & Wear Enterprise Trust Ltd t/a Entrust Ltd
– Entrust Fund Management Ltd
– North East Equity Matching Ltd
– Street North East Ltd
– Financial Inclusion Newcastle Ltd (FIN)
– Service Network (North East) Ltd
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Customer Groups:
– Pre-start
– Start-ups
– Existing businesses
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Work across the North East
Funds under management…
• £19m under management – loans and equity
• We manage public funds
• We have our own loan fund (Street North East)
• Financial packaging – cocktails: business planning and sourcing
public / private funding
• Business Angel Network: Investor Forum
Funds under management…
– Regional Enterprise Loan Fund
– CDFI Pilot
– Transitional Loan Fund
– Street North East Loan Fund
– North East Equity Matching Fund
– North East Microloan Fund
Microloan Fund / “JEREMIE”
• Part of Finance for Business North East “superfund” - £125m
• Previously referred to as “JEREMIE”
– Single Programme
– ERDF
– European Investment Bank (EIB) - £62.5m loan to be repaid on
commercial terms
• INVEST for returns; do not give grants
Microloan Fund - Objectives
• Increase the creation of new enterprises
• Improve the survival rates of new businesses
• Improve the growth rate and profitability of existing micro and small
businesses
• Support businesses where mainstream lending is unavailable
• Create and safeguard jobs
Microloan Fund – Customer Groups
• “Disadvantaged” i.e. individuals starting businesses / small
enterprises who unable to source mainstream finance
• Individuals starting business who face some form of disadvantage
(e.g. Unemployment, disability, residence)
• Individuals starting business who are not disadvantaged but cannot
raise mainstream finance
• Existing sole traders, partnerships, micro and small limited
companies who cannot raise mainstream finance
• Social (Third Sector) Enterprises are eligible
Microloan Fund – Key Figures
• Loan capital
£5m (£1.225m per year)
• Lending period
To December 2014
• Number of Loans
500+
• Output targets
– New businesses
– Existing businesses supported
– Jobs created and safeguarded
300+
200+
1,100+
Microloan Fund – Loan Criteria
• Amounts
£1k - £25k
• Term
Up to 3 years
• Interest Rate
6.5% above UK Reference Rate
• Security
Unsecured but personal guarantees
may be required from Limited
Companies
• Purpose
Normal business requirements
Microloan Fund - Eligibility
• Located in North East of England
• Viable but unable to raise funds elsewhere
• Must not operate in excluded sectors
• Must be an individual starting an enterprise or an established SME /
Third Sector organisation
Microloan Fund – Progress
• Number of applications received:
545
• Number of applications approved:
223
• Value approved / drawn to date:
£2.625m
• In Approval process:
£162.7k
• Pipeline:
> £500k
“Investment Readiness”
• “Loan repayment ready”
• Application Form
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Business Plan / Overview of Business
Balance Sheet
12 month cash flow forecast
12 month P&L forecast
Personal budget
Business Assets & Liabilities
• Business Support available
Third Sector
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£25k - working capital - music industry training and events - cic
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£20k – website development - support services to voluntary orgs - clg
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£25k - working capital for growth - training / personal dev progs - cic
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£25k - working capital - business support and training for music industry - clg
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£5k - stock / equipment - gardening project for people with disabilities - cic
•
£14k - equipment - recycling - cic
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£25k - equipment - training - cic
Assisted access
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Mindset that using debt is good rather than to be avoided;
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Be exposed to “the cost” of taking external expert advice and not only
understand the value that the right external advice at the right time can bring,
but also how to source and “buy” professional input independently in the
future;
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Taking on debt can facilitate access to goods, products, services now that
otherwise would have had to save for and hence can actually bring forward
ability to deliver impacts – use the monies you would normally be saving for
the asset purchase to repay the loan;
•
Have systems in place which can alert to any operational difficulties which
can then be addressed quickly thereby minimising any potential default and
maximising the opportunity for learning for the future.
For more information:
www.entrust.co.uk
0191 244 4000