Issue debt securities to finance your executed contract and innovative project.
Raise debt capital against an executed contract or specific project
Alternative Private Funds
Diversify your SMSF portfolio and earn 10-15% paid monthly
Bond Debt Issuance
Short-term private debt instrument to manage cash flow constraints
SME Bonds Debt Funding
SME Bonds act as a debt facility for the Issuing company. It can include a negotiated interest rate and maturity. Ideal capital raising tool to fund working capital requirements that support non-bank debt. Highly beneficial for existing business models where personal assets are exhausted to meet traditional bank lending criteria.
- Income – earn fixed high income over corporate and government Bonds, monthly or quarterly income streams
- Diversification – for better risk adjusted returns spread across opportunistic asset classes ideal for SMSF
- Protection of capital – debt ranks higher than equity, registered and compliant Bond Issue
- Short to medium term – match Bond tenor to Issuing company’s executed contract or project duration
- Australian SME – invest in innovative and profitable unlisted business ready to scale up
- Flexible funding structures – secured, unsecured, convertible and non rated notes
A hybrid debt / equity instrument that provides a direct and cost-effective avenue for established companies to raise capital.
Bondholders receive regular interest payments until the end of the SME Bond term and the initial principal invested is repaid in full.
The Bondholder and Bond Issuer agree on the term, security, maturity date, and if converted to equity at end of the term.
Smart investors use both shares and fixed income to diversify.
Choosing the right mix in your SMSF or investment portfolio considers your time to retirement, tolerance for risk, and your expected investment returns.
Unlisted Debt Securities
How do SME Bonds Work?
A SME Bond is an agreement between a company and an investor that the investor will lend the company an amount of money, which the company will repay to the investor at the end of an agreed term.
The ‘face value’ of the SME Bond represents the principal amount that the company has promised to pay to the investor and is the basis for the calculation of the interest payable on the Bond. The Issue price is the same; usually is the same as the face value (unless otherwise specified).
While the company is borrowing your money, the company will pay you the investor interest over the term of the Bond. The amount of interest payable on each SME Bond is equal to the value multiplied by the agreed interest rate and paid monthly or quarterly.
SME Bonds may be considered as part of a diversified investment plan. In a balanced portfolio, SME Bonds may offer a higher fixed stream, compared with shares and saving accounts which fluctuate with market conditions and interest rates.
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Why Issue SME Bonds?
- You have NO security to offer the banks, or your cash is tied up elsewhere
- You need to employ extra skill, manufacture, import or export goods or services to fulfill the executed contract.
- You want a compliant registered debt structure to protect your Bondholders
- You want to raise cash for the Project Bank Guarantee
- You want a short-term funding instrument tied to a specific project or contract
- You want to negotiate favorable terms with your suppliers
- Your offering your Bondholders a regular income and high return underwritten by an executed contract
- A new source of raising debt capital for SME’s. The Basel III regulatory banking measures have placed a squeeze on lending, and already impacting on SME’s seeking finance globally.
- As a result growing companies continue to source alternative capital sources and the unlisted SME Bond is private funding that fills the gap.
- Use a SME Bond to finance your material and executed contract requirements.
- Established and profitable companies have the advantage when issuing bonds backed an executed contract or specific project.
- Bond maturity is tied to the implementation or deliverable date of the contract.
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SME Bonds for Acquisition
- Seller could offer the unlisted Bonds as Vendor finance for franchises, management buyouts or acquisition. Suit most industries like logistics, energy, automotive and consumer sectors.
- SME Bonds are ideal as funding alternatives for companies too small to tap into the Corporate Bond market and want to invest in a self-sustaining cash-generating asset.
- The Bond rate is negotiated around the terms of the acquisition or buy-out and converted to equity or refinanced. Can use company assets as security.
SME Bonds as Small-Scale Offers
Accessing alternative capital by issuing a SME Bond is a simple and legal method to raise money from the private debt or equity market through a small-scale offer. Accrutus Capital provides the legal framework and services for you, the Issuer of the Bonds, and assists you in the preparation of a compliant information memorandum about the business opportunity that investors will need to make an investment decision.
SME Bonds are Promissory Notes
A SME Bond (promissory note or note) is a written promise, legally enforceable; to pay on demand, or on one or more specified dates, a specified sum. The note sets forth the terms and conditions of the loan arrangement between the individual or company (issuing the Bond(s)) and the buyer or investor. The term ‘SME Bond’ is interchangeable with the terms ‘Promissory Note’ and ‘Note’. SME Bonds are issued under the Bills of Exchange Act 1909
Bond guidance from ASIC & ASX
To provide a general overview of HOW BONDS WORKS visit ASIC’s guidance is called ‘Investing in corporate Bonds’, and can be found at the MoneySmart website. ASX’s guidance is called ‘Understanding Bonds’ and can be found at Bonds Product page.
These private Bonds are issued from unlisted public companies NOT traded on the ASX in Australia. However, there are SME Bond exchange platforms specially created in Europe that may trade this security.