About Us

Around four years ago, and for the first time in the UK, Basingstoke and Deane Borough Council both established and capitalised 3en Ventures and appointed Innvotec Ltd - an independent fund manager - to identify, make, and manage risk capital - or venture capital - investments within the borough.

The new Lifeline fund will be operated under the aegis of 3en - as a fund-within-a-fund - and will offer unsecured business loans - on the basis of achievement of matched risk capital funding from third-party sources - to sustainable and viable SME's within the Basingstoke & Deane area.

Critically, the key focus of The Lifeline fund will be to promote business expansion inside Basingstoke and Deane (B&D) by creating or retaining employment opportunities across all skill groups.

The Lifeline fund will also offer additionality to the financial support available through 3en - which specifically avoids such "rescue/distress" situations.

Finally, the fund will also specifically be designed to leverage private funds in order to bridge the gap between loans - and the full financing needed

Following extensive analysis by B&D of the SME marketplace, and parallel detailed consultation with local entrepreneurs, it was identified that:

• Due to the current global banking crisis many local early stage businesses are suffering from lack of access to adequate working capital - as banks have become increasingly reluctant to lend, or extend facilities, to SME's.

• In parallel, banks are increasingly looking for shared risk, and if equivalent shareholder equity or matched third-party funding cannot be provided - this can lead to commercially sound loan applications being rejected.

• Additionally, difficulties in renewing existing term-loan arrangements, higher interest rates, and a withdrawal of overdrafts are some of the issues currently being reported by SME's throughout the region.

Accordingly, such viable and sustainable businesses were often failing for the want of relatively small amounts of working capital.

Consequently, B&D determined to support the real advantage the area offers entrepreneurs in terms of skill base/cost of operation - with the direct provision of working capital to commercially viable businesses; this will operate within a structure which reflects the often acute nature of such needs.

The three goals of The Lifeline fund are:

1. To support viable and sustainable SME businesses within the B&D region - by offering access to working capital within a lending model which is both focused and responsive;
2. To offer such loans within timeframes which recognize the typically acute nature of such financial need;
3. To demonstrate and reflect management and investor commitment by requiring an equivalent level of matched third-party funding for each approved loan.

The new fund - The Lifeline fund - will focus upon SMEs (small and medium-sized enterprises), and will offer access to matched risk capital of up to £25,000.

Hence funding from The Lifeline fund is not aimed at businesses that are already well established

Critically, The Lifeline fund is focused on supporting new businesses either which originate within B&D - or which can show economic benefit to the area.

Innvotec Ltd, an FSA authorised fund manager is responsible for ensuring full compliance with FSA regulations, and is an experienced regional fund manager, particularly of early-stage/SME businesses.

Its staff are individually approved to make and manage loans of the type envisaged by The Lifeline fund.

In order to maximise the amount of capital available to the business, the Lifeline fund will not charge any arrangement fees, and wherever possible, will seek to minimise any associated legal or transactional costs.

The borrower in each instance will be responsible for any costs incurred in pursuit of such borrowing - whether successful or abortive.

Given the size of loans and the need to keep transaction costs under tight control, the loans, which will be within limited companies, will be in the form of unsecured debt.

However, in each instance it will be a condition of lending that a debenture over the assets of the business will be registered against any lending; however, personal guarantees will not be sought from any of the shareholders or directors of the businesses concerned.

Additionally:

• Loans will be for a fixed period - typically 24 months;
• Each loan will attract a fixed rate of interest for the period of the loan, interest being payable monthly in arrears;
• Capital repayments will not be permitted during the term of the loan, but full repayment will be required in a single balloon payment at maturity;

To this end, The Lifeline fund plans to use simple, transparent and largely standardised legal documentation, which will both speed the process of loans and help minimise costs.

The Lifeline fund is an open ended or "evergreen" fund, but clearly, there needs to be a clear exit horizon for any loans undertaken.

Thus, in normal conditions, most loans will have a target exit horizon of two years, although in certain circumstances, The Lifeline fund, in conjunction with the business, may consider an alternative exit horizon - dependent upon market conditions, and commercial opportunity.

The money that will be loaned - although over time will only be partially funded from - existing capital within 3en.

Additionally, principal and interest repayments made by existing borrowers will be immediately available as advances/loans to new borrowers.

The purpose of The Lifeline fund is to support business activities for which the lending is not otherwise available on terms and conditions which will permit the continued successful operation of the business.

Before a Lifeline fund loan can be requested, the business in consideration will need to provide evidence that all other reasonable financing alternatives have been exhausted.

Job creation and/or retention must also be included as part of the proposal.

Maximum loan availability will be £25,000; interest will either be payable monthly in arrears, or potentially rolled up over a period not exceeding 24 months.

In the case of default, a debenture will be enforced which will provide priority of repayment.

However, in order to offer additionality, and adopt a relatively benign lending posture, no personal guarantees will be sought.

Any lending from The Lifeline fund must be 100% leveraged with other risk capital, consisting of either private shareholder financing, bank lending, or a combination of the two.

The Lifeline fund therefore cannot exceed 50% of any refinancing package.

The Lifeline fund funds can be utilized for the following primary uses:

• Business development - including sales and marketing
• Inventory/debtor/creditor application
• Broader Working Capital purposes

Other secondary uses will be allowed with the prior approval from The Lifeline fund credit committee.

Loans may NOT be used for certain items - which include but are not limited to the following:

• Repayment of directors' loans, or any equivalent transaction, including creditor payments to related parties
• Restructuring/reduction of bank debt
• Financing of a proposal involving a business or subsidiary outside the Basingstoke and Deane area

Additionally, certain areas of commercial activity are prohibited, for example lending in support of armaments, alcohol and tobacco; these provisions replicate the existing restrictions on investment within the broader Innvotec/3en investment policy.

The interest rate used for the loan will vary - but will be competitive with the general marketplace, and reflect the degree of risk within the lending.

The rate for each particular applicant will depend on the company's financial condition and its ability to maintain adequate debt servicing.

The term of the loan will be determined by the needs of the applicant, generally not exceeding 24 months.

Since the need capital will always be acute in such situations, it is vital the system is real-time, responsive, and provides outcomes within the decision horizon which will address the needs of the business.

Therefore target from receipt of completed application to disbursement might realistically need to be as little as 28 days.

All initial applications will initially be handled on line - through a dedicated website (below).

The Lifeline fund Application Form will need to be completed online; additionally, an adequate Business Plan will also be required; essential to the application are current financial reports.

A nominal non-refundable application fee will be payable on line with any application.

Depending upon the type of proposal, different types of documentation will also be required; these may include, but are not limited to:

• Proof of parallel funding
• Past three years of financial statements (balance sheet, income statement, profit and loss statement).
• Current business statement of affairs
• Schedule of outstanding debt

Upon [electronic/hardcopy] receipt of all required documents and the application fee, fund management will review the application to ensure that the loan request meets The Lifeline fund requirements, that the application is complete.

This will normally happen within five days of receipt of all requisite documentation, and a confirmation that the application will now proceed to credit committee will be provided.

The credit committee will normally meet weekly, and will provide a decision-in-principle within 24 hours.

Since it is recognized that the needs of capital in most instances will be acute, it should be possible to move from receipt of all completed documentation, to disbursement, in not more than 28 days.

We look for businesses with the ability to generate economic added value, wealth within the borough, and critically the ability to create and protect employment.

We also look for a demonstration of genuine financial commitment from both the shareholders and directors of the business, and a management team capable of driving growth.

An independent and experienced credit committee will be established, which will meet weekly in order to review the week's applications.

The committee will enjoy broad commercial representation, with a specific knowledge and understanding of the introduction of a loan-focused approach to SMEs.

The committee will assess the suitability for support based on criterion such as:

• Size, market focus, and job creation/protection
• Management quality and clarity of vision
• Ability to service debt and repay capital to The Lifeline fund

Our process is straightforward:

• Business Appraisal
  We will review your online application. If it is of interest, we will contact you to arrange to meet your management team. If we are unable to support we will notify you normally within 24 hours of online application.

• Loans Approval
  If we believe your business may be suitable for loans we will proceed with formal due diligence - comprising review of the business plan, and analysis of the required submission documents.

• Deal Completion
  If we are satisfied with our due diligence, the application will be reviewed by the credit committee, and if approved, we will finalize the legal aspects, draw up contracts for you to sign and arrange the advance of capital.

In all our activities, we are accountable to the investors in our funds and to all our stakeholders.

In all our dealings, we will be courteous, commercial, and fair; we will also respect the needs of investors, the local community and the businesses in which we invest.

Our standards are embedded in the culture of the Fund and reinforced by our annual performance review process.

Those that oversee The Lifeline fund as a whole will ensure that ethical standards are maintained and that appropriate loans values maintained.

• Availability of "small-sum" matched-investment working capital - up to £25,000
• Tightly controlled transaction costs - in proportion to loan value
• Flexibility and responsiveness - with the ability to move from initial meeting to disbursement within 28 days

The Lifeline fund opens for business from 1st of October 2009 in Basingstoke - and first contact should be through Nick Sharpe on 07973 854989 or NickGurneysharpe@AOL.com