Pension-led Funding - Asset Finance

Pension-led Funding - Asset Finance

What is your product?

Pension-led funding is a flexible form of finance that enables business owners to take control of how their business is funded andhow their pension is invested, all in one transaction.  Pension-led funding allows UK directors to back themselves and invest in their business from their accrued pensions, a typically underutilised asset. These could be pensions from previous employment, private schemes or a director’s portion of a company scheme.  The business owners puts themselves in a unique position of being both lender and borrower, with the funding paid back to themselves and their pensions, not to a bank or third party funder.

How does it work?

The current pensions would be transferred into a new pension vehicle, compatible with Pension-led funding. From there, the pensions would lend or invest up to 65% of the collective value into the business. Over a five-year term, the pension would be repaid in full, with a premium applied, all of which goes back into the pension.

How would a business use your product?

The end use of the funds is at the discretion of the directors, meaning we can assist with takeovers, asset purchases, working capital, refinancing existing borrowing, and everything else in between.  Pension-led funding does suit more long-term funding requirements due to the timescales involved.

What are the approximate costs?

The costs for what we do depend on a number of factors, which require further exploration from both sides. Our work in the first step of the process is to establish what we can do in practice, and provide a fully costed up report based on those options. The bulk of the fees are also paid by the pension at the very end of the process, as the funding is disbursed. 

How long does it typically take to secure funding?

Typically, Pension-led funding takes between 8-12 weeks from first conversation to funds being paid.

What type of security or other requirements do you have?

Pension-led funding can work in both secured and unsecured methods, depending on the individual circumstances.

What supporting documents are needed?

For the purpose of an initial conversation, a ballpark idea of current pension values is all that’s needed.

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