With well-known US companies such as Facebook and Google having used debt finance to help grow their business in the early stages, it was perhaps only a matter of time until UK companies were afforded the same fortuity.
Having identified “a significant gap in the traditional way technology businesses [in the UK] were financed”, Barclays announced the availability of a £100m fund in May 2015 aimed at helping fast-growing domestic technology businesses accelerate to the next level by utilising debt finance.
Lending of up to £5m is available to individual businesses – provided venture capital has already been secured – repayable over 3 years. This type of debt finance will enable companies to focus on areas such as R&D and sales and marketing – crucial in order to quickly grow customer base and secure market share from competitors but typically regarded as more risky by equity investors. Debt finance also, of course, negates the need to part with any equity, thus allowing dynamic entrepreneurs to retain full control of their company’s development and concentrate on rapid growth.
In the 2 months since launch, 10 transactions have been agreed, equating to a value of £35m. With £65m therefore still in the pot, here represents a real opportunity for growth-hungry technology companies to go forth and thrive.