Important notice for borrowers

We urge you to read the risk warnings below and consider the risks associated with borrowing before making any commitment. There is no guarantee that you will receive any funds following the submission of a loan application.

By entering into a loan agreement, you are putting your business assets at risk should you default on a loan. If your loan is secured, your obligations under the loan agreement will be secured by way of a charge or mortgage over the assets of your business (including any investments or property assets). If you do not make loan repayments in accordance with the terms and conditions of the loan provided to you, your assets may be at risk of seizure and sale, and/or all of the funds lent to you may become repayable immediately.

Any reports on certain Borrowers made available to Lenders are addressed to Lenders only. The information contained therein may state certain facts and statements. We are not responsible for checking the accuracy of these facts and statements and Borrowers should not rely on these reports and do so entirely at their own risk.

Information contained on our website and/or platform, or provided otherwise to Borrowers and Lenders, is not intended to constitute an offer or agreement and does not constitute a personal recommendation. Any opinions expressed on the website and/or platform, or otherwise, are given in good faith and may be subject to change without notice.

If you are in any doubt about the action you should take or whether you can adhere to our terms of business or your obligations under any loan agreement, you should seek the advice of your solicitor, accountant or other professional adviser.

Important notice for lenders

Lenders must ensure that they are fully aware of the risks associated with lending to any Borrower before they make any loan.

Loans to companies which have yet to generate revenues or which are at an early stage of development are high risk and you may lose all or some of the amount lent if such companies default.

Information provided in respect of Borrowers has been provided by management or advisors who have been authorised by the Borrowers to do so. All views expressed regarding the Borrowers, projections, forecasts and statements relating to expectations of future events are those of the Borrower and its directors and no other person. No representation or warranty is made, or assurance given, that such statements, views, projections or forecasts are correct or that the Borrower's objectives will be achieved.

Information about past performance and opinions stated are given for your reference and are not to be relied upon, and no responsibility is accepted by SME Services & Holdings Limited, its subsidiary undertakings, its directors, partners, officers, employees or agents in respect thereof.

The following risk warnings are not intended to be a complete list of all the risks involved in lending via the SME Services & Holdings Limited group of companies. If you are in any doubt about the action you should take, you should seek the advice of your solicitor, accountant or other professional adviser.

Loan issues

1. Loss of capital. The provision of loans to Borrowers involves risks. Even if the loan is secured, there is the potential for default by a Borrower which may lead to a complete loss of the amount lent.
2. Illiquidity. Borrowers will generally be small and medium sized unlisted private companies. The provision of loans to these types of companies is highly illiquid as there is no secondary market for the loans.
3. Financial Services Compensation Scheme. The Financial Services Compensation Scheme or similar arrangements are not available for claims related to Borrower default or the default of SME Services & Holdings Limited and/or its subsidiary undertakings.
4. Tax. You are responsible for the payment of your own tax liabilities arising in respect of any loan you make. You should seek independent tax advice before providing loans to a Borrower if you are unsure about the tax consequences.

Risks relating to industry

5. Competition. Borrowers may face various competitors in the market and there is no guarantee that the relevant Borrower will continue to have unique selling points or differentiators. Lenders must consider the risks associated with the level of competitors of Borrowers.
6. Resource. Borrowers may find it difficult to recruit or sub-contract the quantity of people and calibre of people required to meet the financial projections provided by Borrowers. A Borrower’s inability to recruit or sub-contract may adversely affect a Borrower's ability to repay its debts.
7. Operating risks. There are risks associated with managing a rapidly growing business. Even though the relevant directors may have been exposed to such risks many times, there is no guarantee that all operating risks will be fully covered. This could adversely affect a Borrower's ability to repay its debts.

Risks relating to the companies

8. Financial Information. Borrowers provide us with information about their business structure, governance and principal activities as well as historical financial information and projections. Although Borrowers are subject to credit assessments and ongoing monitoring, no third-party evaluation of the Borrower’s ability to fulfil its obligations under a loan agreement is carried out.
9. Management. Unquoted companies typically have small management teams and are highly dependent on the skills and commitment of a small number of individuals. The loss of a key individual can have a significant effect on a Borrower's business and the ability of a Borrower to pay interest and repay loan capital.
10. Interest payments on debt. While Borrowers may enter into appropriate interest rate hedging arrangements, a rise in interest rates is likely to adversely affect the ability of a Borrower to repay its debts.

Risks relating to SME LEGACY

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

1. You could lose all the money you invest

If the business you invest in fails, you are likely to lose 100% of the money you invested. Most start-up businesses fail.

2. You are unlikely to be protected if something goes wrong

Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance.

Try the FSCS investment protection checker: scs.org.uk/check/investment-protection-checker. 

3. You won’t get your money back quickly

• Even if the business you invest in is successful, it may take several years to get your money back. You are unlikely to be able to sell your investment early.

• The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.

• If you are investing in a start-up business, you should not expect to get your money back through dividends. Start-up businesses rarely pay these.

4. Don’t put all your eggs in one basket

• Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.

• A good rule of thumb is not to invest more than 10% of your money in high-risk investments. Find out more: fca.org.uk/investsmart/5-questions-ask-you-invest.

5. The value of your investment can be reduced

• The percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares

• These new shares could have additional rights that your shares don’t have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.

If you are interested in learning more about how to protect yourself, visit the FCA’s website: fca.org.uk/investsmart.

For the purposes of these risk warnings, reference to 'Borrowers' are those borrower companies which make applications for loans via the SME Services & Holdings Limited platform.

These Risk Warnings should be read together with our Privacy Policy and Cookie Policy.