EISA highlights investment opportunity for Small Business Saturday
The organisation responsible for the promotion of private sector investment for early stage businesses is highlighting the availability of the Enterprise Investment Scheme (EIS) as the country celebrates Small Business Saturday on 4 December.
The Enterprise Investment Association (EISA) points out that around £2 billion each year is raised from private investors to back early stage growth businesses. The EIS and the seed equivalent, the SEIS, schemes enable investors to benefit from attractive tax reliefs to encourage them to invest and provide important equity support for businesses that are generally too early stage to attract traditional bank debt.
Director General of the EISA, Mark Brownridge, emphasises the importance of businesses being aware of the terms of the scheme when they set up. “The SEIS and EIS schemes have been responsible for launching thousands of businesses, many of which have grown to be successful employers and contributors to the economy. But businesses do need to register for the schemes with HMRC at an early stage, and at the EISA we are keen to play our part in helping to educate the SME sector as a whole on how businesses apply to benefit from both SEIS and EIS.”
The EISA has joined forces with Capital Pilot in developing and managing an online platform for businesses registered with the SEIS and EIS schemes to give them access to the hundreds of high net worth investors and investment funds that may have an interest in supporting them. Through Curated Capital both businesses and investors can register, with Capital Pilot undertaking an initial analysis of the business opportunities with a view to accessing the right targeted investors.
Whilst businesses need to take their own professional advice before raising investments through the schemes, Mark Brownridge cites three key points as a starter.
• Initially businesses can raise up to £150,000 on the SEIS scheme with investors benefiting from 50% first year tax allowances
• Follow on investments through the EIS scheme offer a 30% tax allowance for investors
• Even if the business invested in fails further tax allowances are available against the lost investment
Mark Brownridge adds, “There are important rules that have to be understood and respected for the tax allowances to be confirmed by HMRC, but put in place and managed properly, the SEIS and EIS schemes should certainly be considered by businesses looking for equity to help them grow, and Small Business Saturday is a good day to remind businesses of the schemes availabilities.”