Growth Finance

Santander: Now offering specialist growth finance for TechCo’s
Santander have signalled their appetite to lend to the Technology sector by establishing a dedicated £200m growth capital fund, marketed under their ‘Breakthrough’ banner. This is specifically designated to bridge the funding gap faced by fast growing SME’s. Funds borrowed from this source must be used to finance growth, eg:

• Establishing a new production line,
• Securing top talent,
• Expansion into international markets,
• Marketing and advertising initiatives.

The obvious advantages of this mezzanine funding source are that it avoids the need to dilute equity and it can be structured without personal guarantees. Other key features:

• Loans are typically available from £0.5 million to £5 million and can work alongside additional senior debt facilities
• Growth Capital loans are paid back over 2 to 5 years
• The interest margin is 10% of which 5 per cent above LIBOR is paid quarterly and the remaining 5 per cent is rolled up and capitalised, but may be higher subject to risk analysis
• The capital is repaid at the end of the term or refinanced.
• Security: Second ranking security for the subordinated loan
• The arrangement fee is 3% of the loan amount

Disclaimer - All information in this post was correct at time of writing.