Are mini-bonds right for your business?
Firstly, what is a mini-bond?
Mini-bonds are a way for businesses to raise money. You decide how much money you need to raise and set a fixed interest rate per annum, for example 6%, that you’re prepared to pay for the period of the bond. Decide on a period you would need the bond over (maturity date), you must repay each investor what they paid for their bond.
What are the advantages over a traditional loan?
The repayment of the amount borrowed is deferred until the end of the term (maturity date) of the bond.
The interest rate is fixed
And if the bond is issued successfully it will mean that next time you need to raise cash you should find it easy to attract investors.
What form do bonds take?
They are normally sold in multiples of £100, perhaps with a minimum of, say, £500 per investor. And the maturity date which can be between 3-5 years with no right for the investor to cash them in before that date.
So, as a business can you issue mini-bonds?
In short yes any business in theory can issue binds. If you want to reach a wider audience you may wish to go through a crowd funding platform, but you will need to meet some set conditions, and pay them a fee to set up and manage this for you.