Businesses can generally be funded in two ways – investment or lending.
Investment generally refers to buying a stake in the ownership of the business in the expectation that the business will do well and be able to give you a return on your investment. It is higher risk (you might not get your money back) but can be higher reward.
Lending is a more secure way of funding. Money is lent to the business by a lender, which might be a director, partner, employee, family member or financial institution. The loan attracts interest and can be recovered (if there is enough money) if the business fails. The lending can be secured with a charge over the business’s assets to provide further protection, both where the company is unable to pay and in the event that it goes into insolvency.
The team at Gardner Leader are skilled in dealing with all types of business funding, whether that is venture capital, lending from family or friends or dealing with bank requirements for lending (including government backed schemes). If you are not sure about the best way of putting money into a business, we can guide you on a different forms and protections available.
We can also deal with employee participation schemes, including EMI option schemes. These need to be dealt with extremely carefully to ensure both compliance with the tax requirements and also ensuring that both parties are protected in the future.
If you are exiting a business and want to know how you can withdraw your investment, we can also advise on the mechanisms for this, including securing payment if it is being paid over a longer period of time.
For more information on how we can help you with your business funding, please contact one of our corporate & commercial specialists in our Newbury, Thatcham and Maidenhead offices below.