PENSION-LED business funding has the potential to provide an estimated £100bn of finance to small businesses in the UK, according to specialist funder Clifton Asset Management.
Bristol-based Clifton, which has recently opened in Glasgow and stages a free seminar at The Lighthouse tomorrow, says pension-led funding has helped more than 1200 SMEs and secured more than 10,000 jobs.
It cites Carlisle-based tyre-maker DMACK, which saw sales rocket four-fold overnight after winning a contract to supply the World Rally Championship.
Clifton says: "It illustrates the importance of collaborative funding with banks, as... tighter capital rules are restricting the volume of bank loans made to SMEs. DMACK found itself in this position as it needed £150,000 to fund production, but its bank could only fund half this amount. Clifton therefore worked with the director of DMACK to arrange £75,000 of finance from his personal pension scheme, offset against the value of the intellectual property (IP)."
Neil Johnston, founder with his wife Suzanne of Edinburgh-based compliance adviser Lime Chocolate Consultancy, also used his pension to finance development of a new brand. He said: "My immediate thought was 'leave your pension fund alone'... but I knew it was sitting in a Sipp that might grow by 5% compound – not enough for a decent pension at 65. In reality, the biggest risk was leaving it where it was."
Mr Johnston was advised to value independently the IP held within the business. "I didn't think there was any IP in the business; I was wrong... all the elements added up to an IP valuation that totalled a lot more than I had expected and needed. The Sipp only acquired IP assets to the value of 40% of the fund, and we have been able to invest in marketing the business and developing the franchise model."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article