The need for funding and investment in business often arises around pivotal moments of growth. Whether it's start-up funding, scaling operations, launching a new product, or expanding into untapped markets, securing the necessary capital can be a game-changer for businesses seeking growth and development.
Businesses can explore various avenues to secure funding, from traditional loans and angel investors to government-backed schemes like SEIS and EIS. Each method offers unique advantages and considerations, making the selection of funding sources a strategic decision tailored to the specific needs and goals of the business. Growth with SEIS and EIS
The Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) offer a significant opportunity for business owners seeking investment without relinquishing control. These government-backed initiatives are tailored to support small and growing businesses by attracting private investment through enticing tax incentives.
SEIS - Seed Enterprise Investment Scheme: SEIS is an ideal starting point for early-stage businesses looking to secure seed capital. Business owners can raise funds (up to £250,000 of investment) by offering investors attractive tax benefits managed by HMRC. Investors can claim up to 50% income tax relief on investments up to £100,000 per tax year, if the business they invest in doesn't succeed they can also offset losses. This means both investors and business owners have a degree of protection through this type of investment scheme.
This scheme encourages business growth by injecting capital into the business without imposing the influence often associated with other investment methods.
Some of the key qualifying criteria for SEIS include:
trading for less than 3 years
less than 25 employees
be established in the UK
must not trade on the stock exchange
no control over any other company
EIS - Enterprise Investment Scheme: EIS is geared towards businesses that require substantial funding for expansion (up to £15M). This scheme offers investors income tax relief of up to 30% on investments up to £1 million annually.
For business owners, it means securing significant capital while retaining control and decision-making power.
It is important to note that for businesses looking to complete several rounds of investment, you cannot go back to secure SEIS investment after securing EIS.
Some of the key qualifying criteria for EIS include:
trading for less than 7 years
less than 250 employees
be established in the UK
must not trade on the stock exchange
no control over any other company
So, if you are a business that has been trading for under 3 years you may want to consider SEIS investment first, and then go onto EIS.
How SEIS and EIS Support Growth:
Attracting Investment - these schemes offer attractive tax incentives, making your business a more appealing investment prospect for potential investors.
Control Retention - unlike traditional investors, individuals investing through SEIS or EIS are incentivised by tax benefits, allowing you to maintain control and influence over your business direction and decisions.
Access to Capital - SEIS and EIS provide avenues to secure essential funding for business expansion, innovation, and development without the imposition of outside influence.
Advanced Assurance - why it's such an important step in the process
Advanced Assurance for SEIS (Seed Enterprise Investment Scheme) and EIS (Enterprise Investment Scheme) is a proactive process, ensuring that a business qualifies for these government-backed schemes before potential investors come on board.
This assurance not only gives confidence to investors but also streamlines the funding process, providing a clearer pathway for businesses to access crucial funding. Seeking Advanced Assurance demonstrates a commitment to compliance, enhances credibility, and significantly increases the attractiveness of a business to potential investors, paving the way for sustainable growth and development.
Our Investment Support Package
We start with a complementary 30-minute introduction to investment call to understand your business, your goals and to discuss the available funding and investment options.
If you decide to opt for SEIS or EIS investment our Investment Support Package is the most likely solution, designed to ensure you are compliant, ready for investment, and are advanced assured.
Here's how this works:
Step 1: We host business strategy sessions with you to create your business plan (with financial plan) - this is an essential part of the process for HMRC approval and Investors, and then to support you post-investment by activating your growth plans
Step 2: We host a business plan review meeting where we sign-off your completed business plan with you and sign the relevant HMRC documentation
Step 3: We complete all the necessary application paperwork, set you up on the HMRC portal, and submit your business plan, financial plan, risk to capital conditions and supporting questions.
Step 4: We complete all HMRC liaison to secure Advanced Assurance
Step 5: We advise you of the outcome and provide you with all necessary information to complete the next steps of securing investment
If our accountancy practice is not your accountant then we pass the information over to your accountant (the chances are we would have spoken with them already to gain some of your business-related financial information).
Step 6: You secure investment straight into your account & your accountant issues the shares and completes the necessary paperwork (minimal)
This package starts from £795 + VAT (payments can be made across multiple invoices).
Note: To fully leverage SEIS or EIS, businesses must meet eligibility criteria and adhere to regulations. This article highlights some key areas, but does not cover all aspects that require consideration. It's advisable to seek professional advice to ensure compliance and maximise the benefits.
Contact our SEIS expert Sian Smith via sian@bas-consultancy.co.uk
