Overview of Small Business Financing with Metro Bank Fundraising

In early October, Metro Bank’s share price fell after reports the lender was preparing to raise up to £600m of capital to help it strengthen its balance sheet and continue to meet its business targets .

To do this, Metro Bank considered various debt and equity solutions, including the sale of stocks, bonds and certain assets such as a portion of its mortgage portfolio.

Less than two weeks after shares fell, Metro Bank announced it had secured £925m. This figure includes a £325m capital raise from new and existing investors and £600m from debt refinancing. Spaldy Investments Limited, owned by Colombian billionaire Jaime Gilinski Bacal, led the fundraising with £102 million and will become the majority shareholder of Metro Bank.

THE challenger bank opened in 2010 and was the first bank to open in the UK in over 100 years.

What does this have to do with small businesses?

Raising funds to achieve business goals can be a necessary task for an organization of any size.

Crowdfunding is a good option for start-ups because the barriers to entry are much lower than accessing traditional bank loans. Plus, just running a campaign helps market a business.

Types of financing

Awards, debt, equity, and donations are the primary forms of financing. For small businesses that are not yet established, rewards and donations are the easiest to receive.

Have 5-6 creative reward packages for different amounts of funds that people donate. If the business is product-based, offering some sort of limited edition product or an invitation to a launch event are reward ideas. Service companies could offer investors consultation, discounts on services or priority bookings.

Donations are exactly that. Money that your supporters give to your cause without expecting anything in return.

Things to consider

If you’re raising money to start a business, once the campaign goes public, your idea is no longer protected.

Some platforms won’t release any funds if the campaign doesn’t reach its goal, so it’s wise to start with a smaller goal initially. Once this goal is close to being achieved, the total goal amount can then be increased.

You should also think about:

• Why do you want to crowdfund?
• What will this bring to the company?
• Why should anyone care?
• How much do you want to raise?
• How will the money be spent?

Which platform to use?

GoFundMe, Kickstarter and Seeder are some of the best-known platforms. However, there are over 90 crowdfunding platforms in the UK crowdfunding market. Use this directory to help you find the one that best suits your business.

Tips for a successful campaign

• Have a strong online presence for your brand. This means that all social networks and websites have clear messages and are up to date.
• Before you start, create buzz in your networks. Ask for their support in advance, so that when your campaign launches, it is already dynamic.
• Create a video pitch to add to your campaign. It should be a compelling 1-3 minute video that includes your founder’s story and tells people why they should invest. This is an excellent sales tool that does not require a videographer to produce it. It’s better to have a phone video than to have nothing at all.
• Have a solid marketing plan. Decide where and with whom you will share your campaign. Do you know any journalists who can help you publicize your campaign? Are you going to run ads?
• During your campaign, work on it for at least an hour a day by posting updates, getting more press, and telling people about it.
• If there’s someone you’d like to have on board because of their connections or expertise, think about how you can put them to work for you, then take action to make it happen.

As with all financial decisions, seek advice from trusted advisors and accountants.