Note also that arrangement fees can have a

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Unformatted text preview: ase rate, depending on the level of risk. Note also that arrangement fees can have a substantial impact on the cost of an overdraft. The interest charged and any arrangement fee for an overdraft is negotiable. The chief disadvantage of an overdraft is that it is theoretically repayable on demand and this is another reason why it is only suitable for financing assets that can quickly be turned into cash. Lessor: A person who leases out property or assets. Liquidity review: An investigation of a company experiencing severe cash flow problems to determine the factors which have caused the cash flow problems and to assess the continued viability of the business. Loan guarantee scheme: The Small Firms Loan Guarantee Scheme is available to help viable businesses obtain debt finance even though they may lack security. Management buy-in: An arrangement whereby a team of outside managers purchase a business, with funding provided by a group of financial backers. Newco: A newly formed company set up as an acquisition vehicle, for example, in a management buy-out. Prospectus: A document offering shares or debentures in a company to the public for subscription or purchase. Ratchet: An incentive arrangement whereby a number of trigger points for future profits are set such that the managers get a bigger share of the equity if the company performs well and a lesser share if it performs badly. Retention of title: The retention by a seller of goods of legal title to the goods until they have been paid for, even though possession of the goods is given to the buyer before that time. 15 Sources of Venture Capital under £250,000 Seed Capital: See Venture capital. In particular, seed capital is the term given to providing finance for the development of ideas into products. Other Contacts Sensitivity analysis: Analysis of the sensitivity of predicted results to changes in the underlying assumptions. Small Business Service (DTI Term loan: A loan for a fixed amount with a fixed repayment schedule normally from a bank. It is most suitable for funding fixed assets and core borrowing. Although the interest rate may he slightly less than on an overdraft there is no opportunity to flex the amount of financing. When the level of financing required is likely to go up and down it is important to choose a form of finance which does not require you to pay for funds you are not using. Therefore a term loan is suitable for fixed assets, but not for working capital. The key advantages of a term loan are that you know when the repayments are and can budget accordingly and the APR may be lower. Small businesses looking for venture capital might also find it helpful to speak to the following: Tel: 0207 215 5000 British Venture Capital Association Tel: 0207 025 2950 Local Investment Networking Company (LINC) Tel: 0141 221 3321 Venture Capital Report Tel: 0207 907 2900 Unincorporated: A form of business that is not a company (normally a sole trader or a partnership). Venture capital: The concept of adding value to investments by participating in the ma...
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