Member Article

North West businesses using pensions to fund expansion

August 11, 2015

Press Release

North West businesses using pensions to fund expansion plans

A growing number of business owners are using their pensions to accelerate their expansion plans.

While pension savings are out of reach for people below the age of 55, this is not the case for business owners wanting to grow or start an enterprise.

Pension-led funding is increasingly being used by SME business owners to realise their ambitions.

According to a report by the innovation charity Nesta and the University of Cambridge, £25million of funding was secured by businesses via the pension-led funding route last year. The average amount raised through PLF was just over £70,000 although in some instances the figure was considerably greater.

A survey by Nesta reveals that 66 per cent of SME bosses said being able to utilise their own pension fund was an “important” factor in choosing PLF, while 73 per cent liked having greater control over their business finances rather than having to rely on traditional high street lenders.

Richard Cunningham, a director of Cheshire-based Enterprise Tax Centre, which runs smepensionfunding.co.uk, said: “These figures back up the trend we have seen among North West SME business owners in the last 12 months. We have seen a doubling in the number of enquiries we have received from regional SMEs wishing to consider pension-led funding as a way of accelerating their business growth.

“Business owners are growing in confidence because of the improved economic climate, but remain deeply frustrated by the traditional lenders.

“Entrepreneurs are not naturally inclined to tread water and wait for the banks to open their doors and that is one of the main reasons why we are speaking to a growing number of businesses keen to find out more about pension-led funding.

“There is no limit on the size of the business to be funded. Any money successfully acquired via pension-led funding can be used within the business to provide a range of solutions and opportunities.”

Andy Wood, Enterprise Tax Centre’s Technical Consultant, added: “We are currently working with clients and potential clients from across the North West, including Manchester, Cheshire and Liverpool, and from other parts of the UK.”

In order to engage in pension-led funding, a business owner will need to transfer their pension into a self-invested personal pension (SIPP) or small self-administered scheme (SSAS). They then set up an arrangement whereby the pension buys assets or loans money to the business secured against the retirement funds. One asset that is commonly used in pension-led funding is the intellectual property (IP) of a business.

NOTES TO EDITORS

· For more information or an interview, please call Nick Mason at Mason Media on 0151 239 5050 or 07903 237008.

· www.smepensionfunding.co.uk

This was posted in Bdaily's Members' News section by mason media .