Business Funding

David, 58, had been retired for two years having sold his textile business. Though David had been enjoying his retirement he had seen a couple of opportunities to get back into business pass him by and he was becoming increasingly frustrated.

David's frustrations were twofold. Firstly, as his money was invested in cash, he was frustrated that the rate of return he was now achieving was unable to even match his inflation rate and he was losing money in real terms. Secondly, although he had enough money to fund his retirement, he also wanted to get back into business and had seen two opportunities pass him by as he was worried about eroding his capital.

The solution we prepared was to invest David's portfolio to get his money working harder and to secure a borrowing facility against this. By having a borrowing facility against his portfolio then should a business opportunity present itself David has access to capital. In the meantime his portfolio will give him the opportunity to make a real return. Where before David was unable to see how he could invest his money and still have cash available, using lending as a financial planning tool has given David the comfort that his retirement income requirements are met and any future liquidity requirements can also be met.

Pension Funding Solution

Matthew, 48 had previously had a lucrative career in finance and had been advised to take advantage of pensions certification and to get enhanced protection registered against his pension pot to protect his large tax free cash entitlement of nearly 40% of his substantial fund.

Matthew had placed his pension fund in a SIPP and ensured that his enhanced protection was attaching to his fund, whilst at the same time realising that there would be no further pension funding available to him unless he wished to break his enhanced protection and revert to a standard 25% commencement lump sum. Matthew intended to draw upon his pension at 55 as he moves into semi retirement, spending time travelling with his wife as well as visiting their son and his family in Chicago.

The prolonged turbulence in equity markets had resulted in a substantial fall in the value of Matthew's pension fund. This appeared to have scuppered his plans for travelling and semi retirement at 55. Although the 40% lump sum was still available it was on a dramatically reduced fund therefore giving a much reduced lump sum and residual pension. He did not want to break his enhanced protection in order to fund the recovery of the value of his pension pot. The options looked fairly bleak, semi retire as planned in much reduced circumstances or wait as long as it takes for the fund to fully recover its value.

We were able to come up with an alternative option for him which is projected to get him back on track much quicker. We were able to lend straight back into his SIPP using the 50% borrowing to boost his portfolio. Matthew is able to look forward to a semi retirement date that has no longer disappeared over the horizon, safe in the knowledge that his pension certification remains intact.

Cash Flow Solution

Steve had run his own highly successful engineering firm for over twenty years. As a result of the credit crunch cash flow within the business had been tight and his business overdraft was under review by the company's bank.

Steve wished to invest in some new machinery and had approached his bank for a business loan which had been granted but with some very large charges and penalty clauses attaching. Steve had approached his financial planner to see if some alternative funding could be arranged.

Having worked effectively with his financial planner and accountant over many years Steve had been able to extract profits efficiently from his business and had accumulated a significant investment portfolio.

By transferring these assets to UBS he was able to secure borrowing against them thereby creating the liquidity he needed to make a cash injection via a Directors Loan to his company. Securing borrowing against his assets also meant that he did not have to encash any part of his portfolio thereby avoiding having to sell some assets at a depressed price or indeed triggering any capital gain on those which have performed well. In addition to the business having sufficient capital to make the necessary machinery purchases he was also able to reduce the company's overdraft. The capital repayments made under the terms of the Directors Loan also allowed Steve to reduce his national insurance contributions and extract profits in an efficient manner.