Month: April 2021

Businesses reopening
ArticlesFinance

Reopening of Retail Could Create Perfect Conditions for Economic Growth Over Summer

Businesses reopening


Despite Lockdown restrictions and post-Brexit trade disruption, February saw the UK economy grow by 0.4%, according to the ONS. Although not quite a boom, this minor growth in economic output is an important foundation for the months to come, and brings ever increasing optimism that the reopening of the economy through April will bring with it an even better performance. “We’re looking for a 4-5 per cent bounce in GDP in the second quarter,” said James Smith, economist at ING. 

February’s improvement from January’s slump was in large part due to the construction sector, which increased by 1.6% thanks to both new work and repair and maintenance on existing rooms and structures. Lockdown has both provided an opportunity for home improvements, as well as new challenges for the building sector as it adapts to Pandemic restrictions and safety requirements, although Ben Dyer, CEO of Powered Now, added that “restrictions seemed to have had a negligible impact on the construction sector so far.”  

As of September, Santander estimated that three in five (61%) of homeowners carried out a DIY or renovation project during lockdown. To add to the economic activity caused by these home improvements, Powered Now CEO also noted that “the Stamp Duty extension has been a house building bonanza, so growth in the industry is no surprise”.  

Now shoppers can visit their local high streets, it is hoped that the construction sector can pass the torch to the retail and hospitality sectors in driving Britain’s GDP growth. Research by Cornerstone Tax, a property tax firm working with small businesses, illustrates this highly positive consumer sentiment – with 53% of the UK wanting to spend their money at local, independent stores. 13% even want to start their own business. This is backed by PwC, which charts the highest consumer confidence since their records began. At +8, it is an incredible 34 points higher than at the start of the pandemic 

This shows that through the restrictions we have all faced, our tastes have changed. It seems the British public want not just to shop physically, but also want to shop at more specialist and independent stores, hinting at a shift in sentiments. We are now more sympathetic and supportive towards independent stores that are part of a community, rather than part of a corporate chain, and the intrepid entrepreneurs behind them that have survived so far through the Lockdowns. 

We have also seen a trend of deurbanisation in the UK – as people leave major cities to look for cheaper properties, rent and more living space now they can work from home. This has obviously effected house prices, with rural areas seeing the biggest rise and inversely London prices falling. However, it has also distributed more consumers throughout more of the UK, which means more spenders and saving stimulating economic activity throughout more of the UK, and crucially, to regions that have long needed it. 

Discussions around saving the high street are nothing new, and have been a part of the British political landscape for years, cropping up at particular moments of difficulty such as the 2008 recession, and now the Pandemic. It is not just good news for the traders themselves, or the shoppers who get to experience something more special, but also the economy as a whole. SMEs account for two thirds of employment, and half of national GDP; meaning this new focus on the high street is good news for everyone. 

David Hannah, principal consultant at Cornerstone Tax, discusses the optimism felt by business leaders in the UK: 

“It has been a tough year for many, but the light is truly at the end of the tunnel for a nation of shopkeepers who can finally serve the public. The 12th April was a vital first step towards reopening the economy safely, and it has come just in time for many – particularly the hospitality and physical retail sectors that have struggled so much through various restrictions on economic life. 

The news that the economy grew in February, even if only marginally, is welcome news for business leaders throughout the UK. This growth is only expected to go one way: up. If the UK can keep infections low, and the vaccine rollout continues uninterrupted, April should be a month of elation as pounds head to the high street.” 

ArticlesTransactional and Investment Banking

How to start your investment journey and increase your income

How to start your investment journey and increase your income

Looking to save money for a down payment on your first house? Not sure how to invest that new inheritance? Or perhaps living through a global pandemic has inspired you to start an emergency fund?

There is never a “perfect time” to begin investing. While diversifying your assets may be the last thing on your mind this year, the good thing is that all you have to do is start. Let’s explore some ideas that will inspire you to begin your investment journey, no matter how much money you have in the bank.

 

Open A High-Interest Savings Account

If you have extra cash you are not using for your immediate expenses or that stimulus check is starting to burn a hole in your pocket, you may consider opening a high-yield savings account. With a high-yield savings account, you can start investing with any amount and still have the option to access the cash quickly in the event of an emergency.

There are many banks that offer options for high-yield savings accounts online that still allow access to cash if needed. Opening a savings account is a risk-free way to begin your investment journey, and there’s no better time than now to get started, no matter your age. Thanks to compound interest, your money will grow much faster than if it were sitting in your checking account, and you’ll be less tempted to spend it!

 

Invest In Real Estate

If you’re looking to diversify your assets, investing in real estate is a low-risk and lucrative alternative to investing in the stock market. When you invest in real estate, you are purchasing a house, condo, or apartment with the intent to find tenants and collect the rent as a profit each month.

Many investors prefer real estate as it provides a tangible, physical asset that can be accounted for and controlled. Real estate also has the potential to appreciate over time as your property’s value goes up, allowing for an additional profit upon eventual sale. If you are considering flipping a house to sell for a profit or investing in a rental property to diversify your assets, consider getting an investment property loan to get started. Just be sure that if you’re investing in a property to become a vacation rental property, you also invest in a luxurious interior to increase your return even more!

While this seems like a no-brainer investment option, there are risks involved with real estate as well. This is less of a casual investment, as you’ll need to do quite a bit of research to get started, and rental properties cannot be quickly liquidated if you need extra cash. You also need to consider additional costs such as hiring a contractor for repairs or a property manager to handle the upkeep of your building, not to mention the potential headache of dealing with renters. Despite all this, the stream of passive income and the advantage of owning a tangible asset that can only appreciate over time, make a real estate investment well worth the risk.

 

Invest In The Stock Market

Many would recommend you invest your hard-earned money in stocks, and experts predict the stock market has the ability to give you the highest potential return over time. When you buy stocks, you are essentially buying a tiny piece of a given company, and the stock market gives an average of 10% annual return on investments according to the S&P 500.

 A benefit to investing in stocks is that you can choose to get as involved as you want or stay hands-off in your investment strategy. If you are interested in the stock market and have the confidence to make your own judgments, it can become a fun pastime choosing where to invest your money. If you aren’t confident yet in your knowledge of the stock market, it’s easy to get started with a beginner-friendly app like Fidelity or SoFi.

The downside in this investment option is that there is some risk involved; the value of stocks can decline over time, and making an unlucky investment can actually cost you, which is the opposite of what we want! If you like the excitement of a little risk or prefer a hands-on investment approach, the ebb and flow of investing in the stock market may be for you.

There are so many options when it comes to investing your money, and the first step is knowing what type of investment is right for you. Start exploring one of these ideas to increase your income and begin your investment journey today!

Property investment
ArticlesFinanceFundsReal Estate

Top Tips to Raising Property Investment Finance in 2021

Property investment


In the UK, property remains one of the most resilient asset classes. From first-time buyers to portfolio landlords, getting established on the property ladder remains a popular way for many to grow their wealth. Depending on an individual’s circumstances and ambitions, Arbuthnot Latham, Private and Commercial Bank, explains the various routes to securing finance for property investment in 2021 and beyond.

 

Property finance for individuals

Many individuals, who have enough capital, will look to supplement their income by acquiring a second or third property on top of the one they live in. This will almost always involve a personal investment of capital and additional funds secured via a loan or mortgage.

The appeal of becoming a buy-to-let landlord is not just the relatively good performance of the UK residential property market, but the fact that the value of the asset can be increased with a proactive approach to property maintenance and improvement. Until now, property has been a very stable asset class, and is one that empowers the owner to increase its value over and above standard market movements. It is important to note, with any asset class, that previous performance is not an indicator of future performance.

If an individual is looking to make this sort of investment, any finance they are able to secure will be contingent on their own circumstances. For example, will they be able to show how they would personally cover a shortfall if rental income doesn’t cover interest payments?

 

Other factors banks consider with individual buy-to-let mortgage applications

Credit rating

Whether they are entering the property investment market for the first time or expanding their portfolio, a clean credit score is an essential part of the puzzle. Small issues like missed payments might not make a huge difference, but County Court Judgements or missed mortgage repayments will be a significant barrier to securing the finance they need.

Minimum income

Most lenders in the UK require a minimum income to consider eligibility, but there are options for those with a lower income threshold, and there are even options available that have no income requirements.

Existing portfolio or assets

What lenders are willing to offer will change depending on if the individual is new to property finance or already own properties. Some lenders won’t consider landlords who own several properties, but this varies across the UK.

 

Property finance for portfolio landlords

Individuals who own four or more mortgaged properties become what’s known as a ‘portfolio landlord’. When they pass this threshold, there are certain expectations on banks regarding due diligence. From here, it’s not just about their own personal circumstances. For example, a bank is required to know the status quo of the rest of their portfolio. They need a deeper understanding of how the assets might interact and will also want to gauge their understanding of the market they’re operating in.

 

Factors banks consider with buy-to-let applications

  • Do they keep accurate records? There are many conditions to satisfy buy-to-let properties (fire safety certificates, guarantees for electrical items, insurance, etc.) More important still for HMOs: annual gas certificates. If they’re disorganised, cannot produce documentation when asked, or their business approach obstructs a bank’s due diligence, this is a red flag when considering a finance application.

  • The bank wants to know that a buy-to-let landlord is competent: aware of their obligations and best practice

  • A portfolio landlord should understand the market they want to operate in. Banks look for investors who have a good handle on their local area. A speculative application – not rooted in a comprehensive business plan – means more risk for the bank and a higher rate of interest.

Portfolio landlords should make sure they chose a lender who is right for them. If the individual are vastly experienced, cheaper rates found on the high street can be the right approach. A note of caution here is that as different lenders’ appetites change, it could result in an ongoing dynamic of regular refinancing to achieve the cheapest rate.

Other investors might move away from -the potentially lighter touch relationship approach of the high street, and opt for a longer-term relationship of consistency where their banker understands their circumstances, has years of sector expertise and can tailor solutions to meet their needs.

This is particularly helpful when circumstances change. The pooled collective knowledge of a real estate finance team can be particularly valuable to help a portfolio landlord adapt when circumstances change.

Digital crypto market
ArticlesMarkets

DFW Based BluCollar to Launch Bold New ICO and NFT Marketplace For the Manufacturing Industry

Digital crypto market

With the ever-increasing popularity of cryptocurrency and NFT (non-fungible-tokens), BluCollar.io is launching its first ICO to capitalize on an underserved market – the manufacturing industry. With little in the way of investable channels, this 2334.60 billion dollar industry (2018) in the U.S. alone, BluCollar is looking to translate those financial transactions and assets to the digital space utilizing the exploding world of NFT’s via its own marketplace. 
“After years of working in the manufacturing industry, we realized that not only do we have massive amounts of transactions that are happening worldwide with a need to move more freely than through traditional monetary infrastructure to keep up, but we’re also sitting on an insane amount of real-world assets that can be tokenized to raise capital. We figured we couldn’t be the only people in this position, so BluCollar was born” – says Sam Bohon, Founder of BluCollar
With a two-part strategy to launch this brave new marketplace, BluCollar will first launch its token on the cryptocurrency marketplace. Based on the standard of Ethereum, by far the most popular open-sourced cryptocurrency blockchains on the market and championed by VISA, PayPal, and popular celebrity investors such as Mark Cuban, and Richard Sherman – BluCollar Token is poised to have a successful ICO Launch on May 15th – August 15th 2021 at BluCollar.io. 
Of course, this is just the beginning. The BluCollar NFT Marketplace is the real hero of the show, allowing manufacturing companies including metal fabrication, construction, and supply companies to tokenize their assets and sell them as NFT’s. These assets can include digital drawings, marketable blueprints, and schematics, as well as real-world assets such as supplies, equipment, and commercial real estate. This enables the companies themselves to raise much-needed capital as well as provide investable ownership to employees as well as the general public looking for a new investment stream. And of course, the currency that powers the marketplace will be BluCollar Token, in itself an investable crypto asset. 
“At the end of the day, we want to help our industry move into the digital age and empower what has always been a rather traditional environment to maximize their financial might. From the workers on the floor to the top CEO’s we can all benefit together through BluCollar and we can’t wait to kick it off!” Sam says. 
After the launch of both the token and marketplace, BluCollar doesn’t plan to rest on its laurels. With a pipeline of spin-off projects such as token and NFT staking and a massive pr campaign already in the works, the sky is the limit in spreading awareness at what a truly massive industry and investable resource this truly is and we’re just at the beginning. 
BluCollar was created to give the manufacturing industry a cryptocurrency and NFT marketplace that represents and empowers the true workforce and disrupts the financial constraints of the current marketplace.
Start Up
ArticlesFinance

Financial Tips For Starting Your Own Business

Start Up
Stuart Clark, Managing Director at Russell & Russell Business Advisers
If one positive emerges from the miserable pandemic year, we have all endured, it is that the number of people in the UK who want to start their own business – to take control of their own destiny – is on a strong upswing.
And it is not just a case of people who have lost their jobs casting around for alternatives. Recent research shows that one in five adults are planning a start-up, a figure which rises to 34 per cent among 18 to 34-year-olds. Only 6 per cent said it was because they had become unemployed.
So, it would appear, the entrepreneurial flame has not been dimmed by the ravages of Covid, but while the ambition to branch out on your own is admirable, it is only prudent to be aware of the pitfalls as well as the pinnacles of being your own boss.
What kind of business is for you? Where does my reward come from? What about tax? How do I price my services? How do I find new business?
These are all valid questions, and it is vital to set out your stall correctly right away, as getting it wrong at the start can prove very costly.
First, it might pay to dispel misconceptions aired in the national press that self-employed people enjoy more tax advantages than employees. This is just wrong. The self-employed have no option as to how they pay tax on profits. That potential benefit applies to owner managers of limited companies.
And it should be remembered that while directors of their own companies may pay slightly less tax, they also contribute a lot more to the economy through corporation tax, VAT, and employee PAYE – and they enjoyed little Government support during the pandemic.
Here are some fundamentals to consider:
 
STATUS: Limited company or sole trader
Sole trader status may be fine for one-man-bands, but businesses seeking investment will want to be a company. There are also potential benefits that companies are thought to be bigger entities than sole traders, though this is not always the case, with customers and suppliers alike.
In addition, whichever structure you choose will affect how you can treat losses, how you pay yourself and how you are taxed.

 

REWARD: How do I pay myself?
Sole traders are taxed on profits. If you make £50,000 profit and take £2,000 a month in remuneration, you are taxed on £50,000, not £24,000.
In a company, profits are taxed at a flat 19%, then shareholders are taxed at different rates on dividends they may take. Roughly speaking, salary plus dividends will result in greater tax savings than salary alone. In the example of £50,000 profits before tax which are fully distributed to the shareholders, this equates to approximately £6,000 extra cash in hand / cash in the business to reinvest each year.

 

What about VAT?
You need to register for VAT if you have sales of more than £85,000 in a rolling 12-month period, whether you are a company or a sole trader, though there are some exempt sales such as medical services.

 

TAX: How much do I pay?
How long is a piece of string? Everyone’s circumstances will differ. What to remember is that paying tax should be a positive – it means you have a successful business. There are ways that you can reduce your liability.
Also, be aware that the first year you do a personal tax return, you will have to pay 150% of your liability, as HMRC will want you to pay 50% upfront for next year. Sole traders and directors need to complete personal tax returns.

 

ACCOUNTANTS: Do I need one?
Yes. That is the simple answer. Accountants are professionals who are trained to make your business more tax efficient and help you manage your finances. They are impartial, scrupulously fair and, above all, on your side. They should also be an investment NOT a cost. They should help you to save money or grow your business.

 

PRICING: How do I get it right?
Beware of discounting. Doing less work at the right price instead of lots of work at the wrong price can have a positive and healthy effect on margins. You need to know who your ideal customer is and what your ideal price point is. This is where a good accountant can make all the difference.
If you buy something for £70 and sell it for £100 then your gross profit margin is 30 per cent. To make £300 you need to sell 10 units. If you gave a 10 per cent reduction in price this would mean your gross profit per sale would drop to £20.
So, to make £300 you need to sell 15 units. A 10% discount means you need to do an extra 50 per cent more sales to make the same amount of money.
 
BUSINESS: How can I keep it coming in?
You can never make it too easy for your customers to do business with you. Get to know them, understand your ideal customer and where they “hang out” so you can target them, either online or at networking events, and consider partnerships with other businesses and use referral schemes.
Marketing is like a little wheelbarrow. You can put all you want in it, but unless you push it you don’t get anywhere!
 
ANYTHING ELSE?
Insurance. As a sole trader you are personally liable, whereas a limited company’s liability is, yes, limited.
Wills and power of attorney. With luck, your business will become an asset and therefore part of your estate. And without power of attorney, money could be trapped in the business in event of personal misfortune, leaving employees and suppliers unpaid.
Remember, accountants think about all the matters above so that you can concentrate all your energies on building the business of your dreams.
Success is there for the taking. Good luck.
Fintech purchase
ArticlesFinanceMarkets

Fintech Platform Butter Raises £15m

Fintech purchase


Butter, the London based fintech platform that started life as the UK’s first Buy Now Pay Later (BNPL) travel agency, has just closed a £15.8m funding round to accelerate the rollout of its responsible open-banking based BNPL shopping app.

 

Who has invested?

Butter has raised £15.8m via BCI Finance, the credit arm of London based venture builder Blenheim Chalcot, as well as a number of other private Angel investors in order to expand Butter’s offering.

 

What is Butter?

Irritated by the lack of flexible payment options whilst planning a holiday, co-founder Timothy Davis was inspired to build the UK’s first buy now pay later travel agency, enabling travellers to spread the cost of travel arrangements over time, with full payment not due until after the trip.

Together with co-founders Stefan Hobl and Nik Haukohl, Butter achieved full FCA regulated status in 2017, and 4 years later, Butter has evolved into a British fintech platform with over 100,000 customers, offering instalments across every consumer vertical and flying the flag against other sector giants such as Klarna.

Butter quickly established a firm foothold in the travel and tourism industry as the UK’s first BNPL travel agency, providing a flexible, cost-effective way to book travel, with full payment not due until after the trip. A ‘layaway for getaways’.

When the pandemic brought the travel and tourism industry to a grinding halt two years later, Butter adapted fast, launching the UK’s first BNPL shopping app alongside their travel offering, enabling customers to spread the cost of any purchase from any online store.

 

What makes Butter better?

Unlike other BNPL providers, Butter’s unique “over-the-top” (OTT) solution enables customers to spread the cost of purchases with every store on the internet, without requiring merchants to support Butter via a technical integration. Instead, Butter’s in-app universal checkout takes care of paying retailers, with customers then able to repay the costs over 2, 3, or 4 monthly payments.

Popular stores in the Butter app include Amazon, Argos, BooHoo, ASOS, H&M, Zara, Hugo Boss, Sports Direct, AirBnB, Currys PC World, Ao.com, IKEA and more.

As the UK’s first FCA regulated BNPL provider, Butter has successfully developed a unique credit decisioning process with affordability at its core, utilising open banking and machine learning to ensure that lending is responsible and that customers are only able to borrow amounts based on what they can afford.

Timothy Davis, Co-Founder and CEO of Butter, commented: “Our goal at Butter has always been to provide consumers with a simple and responsible alternative to credit cards and loans, enabling them to instantly spread the cost of anything from a takeaway to a holiday over a simple and transparent instalment plan, all within one easy to use account.

We want to remove the stigma surrounding the buy now pay later offering and empower consumers by allowing them to budget and spend intelligently and in a manner that suits their individual financial needs.

We’ve set out to achieve this by building a platform focussed around transparency, responsible lending and the ability to transact on bigger ticket items compared to other providers, whilst also offering more choice to customers through our unique over-the-top solution, which enables consumers to shop any online store in existence with Butter.

The funding that we have secured via BCI will help facilitate the scale-up of our business as we continue to pioneer innovation in the buy now pay later space.”

 

Paul Maurici, Investment Manager at BCI, commented: “Our mission at BCI is to be the funder of choice for UK Fintech’s looking to scale.

Butter is a young and ambitious company, which combines a tech-enabled approach to lending alongside impressive customer delivery capabilities.

With its FCA authorisation already in place, the business is well placed to continue strong growth while assisting its customers in managing their money better.”