frequently asked questions
- Am I eligible to apply for an investment?
Most small and medium sized companies based in the North East of England (or planning to relocate to the North East of England) are eligible. There are a small number of excluded sectors and activities, so to discuss your particular circumstances please call us on 0845 1111 850.
- What sorts of companies can apply for investments?
Your company must be “limited by shares”. We cannot invest in sole traders or partnerships. If your company is part of a group of companies we would expect to invest in the “top” company which must be limited by shares.
- How much can I apply for?
The North East Growth Fund can invest from £50,000 to £400,000 at any one time in any one company.
- How long does the investment application process take?
Typically from 8 to 12 weeks. However this very much depends on the completeness of the information you provide to us and how quickly you respond to any requests we have for further information.
- What sort of information/documentation will I need to provide?
To apply for funding you will need to provide a business plan. Your accountants or other financial advisor can help you prepare this document.
- What sort of research into my business will NEL undertake?
NEL will review your business plan and then undertake research (also called “due diligence”) to determine whether the key facts and assumptions in the plan are correct. This due diligence will cover many areas including:
• your key staff;
• your products or services;
• your markets;
your company’s past performance, current financial position and financial forecasts.
- What can investments be used for?
As the name suggests, an investment from the North East Growth Fund, should be used to help your business grow. There are a small number of excluded activities. To discuss your particular circumstances please call us on 0845 1111 850.
- What types of investment does NEL provide?
The North East Growth Fund, managed by NEL, provides unsecured risk capital in the form of equity or mezzanine investments.
An equity investment is where the fund buys shares in your company (i.e. the fund becomes a shareholder). Usually part of the investment will be in the form of loan stock (a type of loan).
A mezzanine investment is a loan (so the fund becomes a creditor) where the return to the fund is predominantly based on the performance of your company.
- Does my company need to have a certain minimum turnover, or employ a minimum number of people to be considered for investment?
There is no minimum turnover or employee number requirement.
- Does my company need to be based in any particular area in order to qualify for an investment?
Your company must be based in based in the North East of England or be planning to relocate to the North East of England. If you are not sure whether a particular location is classed as being in the North East of England please call us on 0845 1111 850.
- Will I need to provide any of my own capital to go alongside your investment?
It is not mandatory that you invest alongside the North East Growth Fund. However we will expect you (and possibly other senior management team members) to have made a meaningful financial contribution to the business. We much prefer to invest as part of a larger funding round which may involve finance from one or more of the following:
• the management team
• business angels
• other venture capital funds
• asset backed lenders
- Are you able to do co-investments with other parties?
Yes, we prefer to co-invest with other parties.
- How long will I have to repay the money?
The exact terms of the investment will be tailored to your current financial situation and forecasts. Typically we expect our investments to be repaid within 3 -5 years.
- What costs are involved with completing the investment process?
NEL will charge an arrangement fee of 1% (for a mezzanine investment) or 2% (for an equity investment) of the amount invested. For equity investments both our and your legal fees will be recharged to your company. Mezzanine investments can be made without either side appointing legal advisors, but if they are appointed those costs will be recharged to your company.
- Do NEL’s investments need to be secured on anything?
All investments from the North East Growth Fund are unsecured.
- What sort of help will I get from NEL during the investment process?
We are happy to talk to you before you apply to check that your proposal is likely to be eligible and appropriate for the North East Growth Fund. Once you have applied to us we will advise you of what further information we require and how your application is progressing through our investment process.
We recommend that you seek advice from your accountant or other financial advisor prior to applying for funding.
- What sort of involvement would NEL have with my business after an investment has been made in it?
For an equity investment NEL would normally appoint a Non Executive Director to assist you in achieving the business plan that you presented to us. In certain circumstances we will appoint an observer to attend board meetings rather than a Non Executive Director.
For a mezzanine investment we will either appoint an observer, or a relationship manager who will meet with you regularly to discuss your company’s progress.
For all types of investment you will need to provide us with monthly management accounts and annual audited accounts for the duration of the investment.
- What sort of investment track record does NEL have?
NEL has made over 500 investments in over 400 North East based small and medium sized companies. Examples of some of our recent investments can be found in the case studies section of our website.
- Where does the investment capital come from?
The North East Growth Fund is funded by the European Investment Bank, the European Regional Development Fund and ONE North East.
- Can I contact any of your previous investees about their experience of the investment process?
Certainly. Please call us on 0845 1111 850 for further information.