What is pension-led finance?

With the help of an NACFB-accredited broker, pension-led finance can unlock the power of your pension to support your business’s expansion.

Pension-led finance is a unique and flexible funding option that allows small and medium-sized business owners to leverage their pension funds to secure business finance. Rather than relying solely on traditional lending sources, business owners can tap into their pension pot to access the capital you need.

Here’s how it works. A pension-led finance broker will work closely with you to assess the feasibility of using your pension funds for business purposes. If suitable, a Small Self-Administered Scheme (SSAS) pension is established, and your business becomes the sponsoring employer.

The pension fund then makes a loan to your business, providing you with the necessary capital. Your business repays the loan over an agreed period, with interest, into the pension fund. This unique arrangement allows you to access funds that would otherwise remain locked in your pension, fuelling your business growth while still preserving your retirement savings.

Pension-led finance options can offer greater flexibility, as the loan can be used for various purposes, such as expansion plans, working capital, or investment in new equipment or technology.

An example of how pension-led finance can work is a construction company using their pension funds to finance the purchase of new equipment, such as heavy machinery. By accessing their pension, they can avoid higher-interest loans or leasing arrangements, retain ownership of the assets, and make repayments back into their pension fund.

Discover your business loan options through NACFB-approved UK brokers