Frequently Asked Questions

Mercia Business Loans supports growing and established SMEs across the North and Midlands with a focus on the Yorkshire and the Humber and the West Midlands with funding from £100,000 to £2million, helping ambitious management teams with their growth plans.

Frontier Development Capital is part of Mercia Asset Management PLC and deploys the Midlands Engine Investment Fund II (MEIF II) to established SME businesses, offering business loans between £100,000 and £2million.

Mercia Business Loans deploys across all the North and Midlands, with a focus on Yorkshire and the Humber and the West Midlands regions via the Northern Powerhouse Investment Fund (NPIF II) and the Midlands Engine Investment Fund II (MEIF II) funds respectively.

Businesses can borrow from £100,000 to £2million.

Typically, our loans will be over a 12–60-month term. We can occasionally accommodate a short capital repayment holiday if required.

The fund is largely sector agnostic, meaning we can lend to most businesses.

No. Our mandate does not allow us to refinance existing business borrowing.

At Mercia Business Loans, we utilise the current description of an SME as per the UK Companies Act.

An MBO or Management buyout is a corporate transaction where a company’s existing management team buys the business from its current owners.

An MBI or Management buy-in is a corporate transaction where a new management team buys the business from its current owners.

The funding can be used in a variety of different ways including working capital, recruiting new teams, launching a new product or service, new larger premises, purchasing new machinery and equipment, acquisitions, and supporting share transactions such as management buyouts and management buy-ins (the latter by exception).

You can’t use the funding to refinance existing borrowing.

At Mercia Business Loans, we take a commercial view at any transaction and will consider this as part of our overall assessment. Our investment decisions are made in person by an Investment Manager and very experienced business lenders, and our decisions are made on a case-by-case basis.

You will work closely with our Investment Manager and your dedicated Portfolio Manager throughout the life of the loan. If you think you are going to miss a payment, the earlier we know the better.

Post-investment, we provide you with a dedicated Portfolio Manager, who will be your primary contact throughout the term of the loan. They will work with you through any challenges you face that could include missing a repayment. Your communication with us and our experience will help us work together through this kind of challenge, together. Sometimes, it’s as simple as catching up the repayment a few days late once cashflow corrects, all the way through to rescheduling the loan repayment profile.

It’s really important to communicate with us throughout the life of the loan. We understand businesses face challenges. In the case cash flow faces challenges, that’s the time you communicate with your dedicated Portfolio Manager as early as possible so we can work together.

Throughout the life of the loan, you will have access to a dedicated Portfolio Manager who will support your business. We have a collaborative approach and use our networks to support the growth of your business.

Mercia Business Loans is a gap funder and therefore in isolation our funding is not the silver bullet. We collaborate closely with other funders, banks and asset financiers to help bridge the gap between what the business needs and what the primary funders are able to provide. Mercia Business Loans has an extensive range of relationships with primary funders across all of those types of lenders.

Don’t worry, our investment team are able to point you in the right direction, either to another Mercia fund or external collaborative partners.

NPIF II and MEIF II funding is suitable for:

• SMEs based in the North or the Midlands
• Established and growing businesses that can demonstrate profitability and/or strong forward cashflows

Our investment decisions are made in person by an Investment Manager and very experienced business lenders, and our decisions are made on a case-by-case basis.

Our investment team will work closely with you throughout the process so you are actively included. If we can’t support, we will let you know quickly and introduce you to one of our partners who might be able to help fund your business.

Our investment decisions are made in person by an Investment Manager and very experienced business lenders, and our decisions are made on a case-by-case basis. In most cases, due diligence will be carried out in-house by our investment team.

Yes, and ordinarily we do not charge an early-redemption fee unless there are exceptional circumstances.

No, unless there are exceptional circumstances.

Yes. Mercia Business Loans has a track record of co-investing alongside other Mercia and external funds as well as traditional lenders such as the banks.

You will receive your funding into the company bank account once the conditions of the loan have been met. Typically, the process can take a few weeks to a few months dependent on the complexity of the loan and your requirements as a business. We move at the pace you are comfortable with.

This is a business loan, and we will not seek to take an equity stake in the business.

Yes, we will typically take corporate security including debentures, inter-company guarantees where there is a group scenario, postponement of directors’ loans where they exist and unsupported personal guarantees from directors/majority shareholders for an element of the initial loan value in most cases.

No, however we have a proven track record of supporting investees with follow-on funding, after an initial loan.

An initial conversation with our investment team is the first step where you can set out your funding needs and where you want to take the business.

At Mercia Business Loans we know every business is different. Depending on the complexity of the business, your Investment Manager will outline what information is required to progress your application. Common financials which we would require include financial accounts, management accounts and budgets.

You can contact us through our application form here (insert link) or by emailing marketing@mercia.co.uk or by phoning 0330 223 1430