Finance for

Growth Workshop

Oct 18

How we can help

Classification: Green, Amber, Red, Purple (delete as appropriate). 2

Branch network

250 branches in

Ireland

Ireland’s

number one

business and

corporate

bank*

Lending Reach

Lending Reach

We provide more

than 50% of new

SME / Agri lending

to the market*

Dedicated

Business and Agri

Lending Advisers

Community

Support Extensive

Enterprise

Programme helping

you to network and

find new customers,

suppliers and

partners

Thinkbusiness.ie Free

guides, tools, templates

and advice offering real

commercial value

Dedicated Business

Startup phone support

team 0818 200413

24 month Business

Startup Package

Objectives of the Clinic

To help you understand how our small business lending application process works

To explain clearly the key pieces of financial information we require from you

To look at the different types of security that may be considered as part of the

application

To familiarise you with Government initiatives that assist in facilitating the availability of

credit to the SME market and which are fully supported by BOI

To look at some alternative non bank lending sources

To inform you of the services and supports available from Bank of Ireland

The Clinic Content – Key Elements

The Business Plan Credit Applications Financials

Purpose and Use

Content

Key Questions - Promoter &

Purpose

Information Required and Why

Security

Why it is needed

Types of Security

Seed & Venture

Capital Credit Review Office

Funds Delta Partners

Kernel Capital

Government

Initiatives

SBCI

Credit Review Office

Credit Guarantee Scheme

Microfinance Ireland

Local Enterprise Office

SME Online Tool

Balance Sheet

Profit and Loss Account

Cashflow Statement

Business Plan – Purpose and Use

The purpose of a business plan is to: – Establish the fundamental viability of the project

– Document a plan for the business

– Act as a yardstick for measuring progress

– Communicate plans for the business to external audiences

A business plan summarises the following points about a business: – Where it has come from

– Where it is now

– Where it is going in the future

– How it intends to get there

– How much money it needs to fulfil its plans

– What makes it likely to succeed

– What threats or disadvantages may arise along the way and how they can be

overcome

– The ability of the business owner to implement and deliver the plan

Business Plan – Content

What Constitutes a good Business Plan?

Your Business Plan should contain the following sections:

Background and description of the business

Management and organisational structure

Market research and marketing plan

Channels of distribution and Sales Management

Operational plan

Financial plan

Points to note:

Business plans need to be realistic, not overly optimistic

Ensure key risks/dependencies are clearly called out

Credit Application

Financial information required by the bank:

Up to date Financial and Management Accounts

Cashflow forecast and working capital requirements

Financial projections

Confirmation of current tax status

Personal ‘Statement Of Affairs’ – which sets out the financial position

of the owner

Any other financial information deemed necessary to that particular

application

Why we seek financial information

Primary focus when analysing financial statements is to establish if repayment capacity exists at present and is likely to exist throughout the period of the borrowings

It helps to quantify the level of risk attaching to existing or proposed borrowings

While not the sole indicator of future performance we will review historic financial and trading figures as part of the application

We also seek financial forecasts to identify future revenue streams

What we are really assessing is the business’ ability to service the debt and ability to do so over the term of the loan

Stress testing will reflect the robustness of the business repayment capacity against future increases in interest rates

Financials

The Balance Sheet is a point in time statement of wealth/net worth

In essence the balance sheet shows the Assets and Liabilities of the Business on that day, and is of most use when used in conjunction with other financial information

The Profit and Loss Account shows how much profit (or loss) the business made in a given period (usually a year)

Profitability does not always mean liquidity as cash can be absorbed by:

Working Capital and/or

Capital Expenditure and/or

Excessive Drawings/Dividends

The Cashflow Statement is used to report the cash generated and used by a company during a specified period

Cashflow is the life blood of the business and many cases of business failures have been as a result of ‘running out of cash’

Managing the cash cycle in the business will ultimately determine whether the business has the capacity to service a debt

Security

Level of security dependent upon:

Extent of the exposure

Type of facility provided

Term of facility

Borrower’s own cash input

Bank’s evaluation of the level of

risk involved

Main Security Types:

Land – Fixed Legal Charge

Life Policy

Lien on Deposits/Cash Cover

Personal Letters of Guarantee for

Limited Company debt –

demonstrates owner’s

commitment

The Bank takes security to mitigate risk but the most important question is

whether the customer can repay the loan

11

1. Strategic Banking Corporation of Ireland

The SBCI is Ireland’s national promotional finance institution. Their stated objective is provide financial supports to Irish SMEs and ensuring the efficient use of available EU resources, either directly or as a service provider. Current schemes include;

SBCI* On-Lending; low-cost funding (0.4% discount) to SME’s and Agri borrowers.

SME’s; SME DeMinimis SBCI Scheme; purchase of machinery, business premises & working capital

Agri; Agriculture Investment Loan Scheme (AILs); machinery & improving farm buildings.

Loans €25k - €5m. Term 24 – 120 months. Enterprises in Financial Difficulty not eligible.

SBCI Agri Cashflow Support Loan; low-cost loan scheme to support farmers experiencing short-term

financial pressures due to farm prices & income volatility. Fund working capital, refinance of merchant credit or

replenish working capital used to finance capex.

Term < 6yrs. Unsecured. Fixed rate 2.95%.

SBCI Brexit Loan Scheme 2018; low-cost loan scheme to support SME’s impacted by Brexit to fund

Working Capital and/or innovation to adapt/mitigate Brexit challenge.

Term of 3 years, minimum of 1 year. Fixed rate 4%.

* Restricted to SB&A borrowers only.

Government Initiatives

12

2. Credit Review Office

• The Credit Review Office was set up to ensure credit is not refused to viable businesses with valid propositions

• Customers must fully exhaust the Bank’s internal appeals process prior to invoking the CRO

• Customers, who have had their application for credit (or restructure of facilities) declined, reduced or are not happy with the terms of sanction, have a right to appeal the decision to the CRO

• The CRO will undertake an independent and impartial re-evaluation of the Bank’s decision

• Since October 2013 a maximum loan size of €3m threshold for SMEs applying for a review by the CRO

• The CRO review process will provide an independent opinion on the lending decision with either an endorsement of the original outcome or a recommendation to overturn it and provide the funds

• More information is available at www.cro.ie

Government Initiatives

Government Initiatives

3. Credit Guarantee Scheme

The purpose of the scheme is to encourage additional lending to SMEs. Refinancing of other bank debt (non BOI) can be covered under the scheme. 80% guarantee to Bank.

Eligibility criteria: Viable SMEs that can demonstrate repayment capacity, but which do not fully meet the Bank’s credit policy and have been declined due to either:

Insufficient security for the new/increased lending, or

Aspects of the SME sector, target market or business model which are deemed to be high risk under the Bank’s lending criteria

An annual 1% premium is paid to the Government by the borrower for availing of the scheme

4. Microfinance Ireland (MFI)

MFI has been funded by the Government to provide loans to newly established and growing microenterprises across all industry sectors that do not meet the conventional risk criteria applied by banks. For a business to be eligible, they must:

Have a turnover of less than €2million

Employ less than 10 staff members

Be seeking funding for less than €25K (funding is provided on a term basis)

Classification: Green

WHAT IS THINKBUSINESS? ThinkBusiness.ie is Ireland’s number one online resource for

SMEs a reference site to learn how businesses deal with

opportunities and challenges.

THINK BIG – THINKBUSINESS

• Starting – how to start a business

• Running – how to keep a business going in the right

direction

• Growing – how to grow a business, how to export

goods and services

• Business Planning – how to plan for success and the

tools you need

• Marketing – building a brand and how to rise above

the rest in the digital age

• HR – building the best team

• Sales – successful sales strategies and how to

achieve more

• eCommerce – how to get online, sell online and grow

online

Classification: Green

Easier Banking Online

Compare your options

Choose from our two online banking channels to stay in control of your business finances:

365 Phone & Digital Banking

Convenient and easy to bank with. Available to both Personal and Business customers (Sole

traders, Trading As and Agri customers) who require:

Single user access to online banking

Need to make low value payments online

Only need single authorisation to make a payment

Now open to Small Limited Companies1

Business On Line

Online banking solution for Larger Business Customers who require enhanced online

payments functionality:

Multiple users

Higher payment limits

Dual payment authorisation to ensure security of payments

Make Bulk Payments

Bank of Ireland and Your Business

The Next Steps:

Talk to us – arrange a meeting one to one

We want to develop a long term banking relationship with you

We have a full range of business support services available to your business and will

ensure that all of your needs are met

We want to provide all viable businesses with suitable credit facilities – adequate

funding is available to support all viable and sustainable businesses

We are committed to supporting customers in or facing financial difficulty

We are here to support your business and build

relationships now and for the future

Disclaimer

This document has been prepared by Bank of Ireland Business Banking for informational purposes only. Not to be reproduced without prior permission. Any information contained herein is believed by the Bank to be accurate and true but the Bank expresses no representation or warranty of such accuracy and accepts no responsibility whatsoever for any loss or damage caused by any act or omission taken as a result of the information contained in this document. Unless specifically stated otherwise, no prices or rates mentioned are bids or offers by the Bank to purchase or sell any currencies, securities or financial instruments. Except as otherwise may be specifically agreed, the Bank has not acted nor will act as a fiduciary or financial or investment adviser with respect to any derivative transaction that it has or will execute. Any investment, trading and hedging decision of a party will be based on its own judgement and not upon any view expressed by the Bank and shall be based on an arms length negotiation with the Bank. You should obtain independent legal advice before making any investment decision.

Thank You!