More than a quarter of SME owners would use independent financial advisers to discuss business funding, but most remain unaware they could source finance directly through their pension funds.
Research from pension-led funding specialists Clifton Asset Management (CAM) found 29% of small and medium sized business owners would use financial advice to investigate funding options.
However, it found 73% of bosses are unaware of the concept of pension-led funding.
The product uses business owners' pension scheme money to invest directly into their business through a self-invested personal pension (SIPP_ set up, overseen by a trustee company.
CAM also works with the business to value its intellectual property - including patents, trademarks, brands and website domains. This can then be invested in through the SIPP, for example where a strong brand name exists, it could mean the pension scheme offering licenses for other entities to use the name.
CAM said used in combination, IP-based pension-led funding could realise about £100bn in finance to the SME business sector, boosting the economy.
It added that despite changes in the Finance Act 2004, which led to IP being recognised as an acceptable asset class for use in pension-led business funding, this appears to have been "a secret well-kept".
CAM chairman Adam Tavener said: "It's a matter of educating business advisors, including banks, that this type of funding can put their clients back in control of their own business financing. It's not an either/or and the banks and other funders are gradually recognising the benefits of pension-led finance."
He admitted the product is not without risk and money could be lost from a pension scheme should the business go under.
However, he added that detailed due diligence was undertaken to weed out potential problems and business owners who have doubts about the viability of their company should not use the product.
He also said while the product was not cheap, it was an effective alternative to banks which are currently reluctant to lend and could save viable small and medium sized businesses.
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Retirement Planner Forum 2019