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Briefing Note to Intermediaries: November 2008

Interest Rate Rebates

Published: 24th November 2008

Following the recent reduction in base rate and taking the current economic climate into consideration SYIF is keen to demonstrate that we are responsive to the needs of local businesses.

We have therefore reviewed our interest rates for new lending with immediate effect.

Small Business Fund

The gross interest rate charged on all loans remains unchanged at 12% fixed but rebates have been increased by 1%.

The new rates are as follows;

  • Established and profitable - net 7%. Established and profitable is defined as three years profitable trading, and forecasts, commensurate with the proposed debt levels.
  • Established - net 9%. Established is defined as three years trading.
  • Early stage businesses - net 11%. Trading less than three years.

These new rates have been set in line with European State Aids which limit the minimum net rates which we can charge.

The rebates are subject to certain conditions including the timely provision of management accounts and compliance with the terms of the loan agreement. Further details are available on our website www.syif.com

The Small Business Fund will shortly achieve its major goal of full investment, which will help provide a legacy of £20 million for further investment in South Yorkshire. To date the Small Business Fund has invested over £18m and we have a further £500k of funding available until the end of the year.

Capital and Development Funds

The Capital and Development Funds continue to offer a rebate on its loans. The level of rebate and the underlying net interest rate paid will be dependent upon the risk associated with the investment.

The Capital and Development Funds have to date invested just under £23m and have around a further £3.5m to invest throughout the remainder of 2008.

Seedcorn Fund

The Seedcorn Fund continues to make investments in the form of equity investments or through convertible loans. Larger investments are made in phased payments related to progress against agreed development milestones.

The Seedcorn Fund has £600k to invest throughout the remainder of 2008.

SYIF continues to work closely with Yorkshire Forward and Partnership Investment Finance (PIF) to develop plans of a Regional Successor Fund which we anticipate will start investing by autumn 2009.

In the meantime, we will continue to invest through the Interim Fund, ensuring that South Yorkshire businesses can continue to access finance when they need it and that the momentum SYIF has gained will not be lost.

An update will be sent nearer the date but please note that from January 1st 2009 all new business loans will attract an arrangement fee and the dispensation for loans up to £50k will fall away.

If you have any questions on this or any other issue please contact one of our Investment Managers or our enquiry line 0845 649 0000

Tony Goulbourn
Chief Executive