Risk summary

Investing in Advancr Bonds does carry some risk and you need to ensure that you have considered and understood these risks before you decide to invest in Advancr Bonds.

Investing in Advancr Bonds mean that you are lending money to Advancr Leasing Limited. You will not become a shareholder or have any ownership stake in the company. Instead, subject to the risks that we describe here, you will receive regular interest payments and at the end of the term of each Advancr Bond (when it matures), your initial investment amount back. It is important to understand that Advancr Leasing Limited is solely responsible for its financial status and consequently its ability to pay interest and return your capital when the Advancr Bonds reach maturity.

Loss of investment and/or interest payments

Like all businesses, Advancr Leasing Limited is vulnerable to financial difficulty and investing in Advancr Bonds involves the risk of Advancr Leasing Limited becoming insolvent. Should this happen you may lose some or all of your initial investment and lose some or all of any outstanding or future expected interest payments. Even though we have put what we believe to be comprehensive risk processes in place to mitigate the risk of financial difficulty, it is important that you understand that such a risk exists. Advancr Bonds are not insured by a third party and are not protected by the Financial Services Compensation Scheme (see full details in the FAQs section). You should not invest any more than you could afford to lose. If you have any doubts or want to find out what you could afford to lose without unduly impacting your standard of living, you may want to speak to a financial adviser.

Committing to the fixed term

The longer the length of time you lend your money to Advancr Leasing Limited, the better the rate that you receive. However, you are committing your money for the length of the Advancr Bond’s duration. Advancr do operate a resale market, available within your dashboard, for investors who wish to exit their Advancr Bonds early. Please note that transfer of bonds cannot be guaranteed as it is reliant on finding an investor willing to purchase the available bond(s). Bear this in mind when you decide the amount you are happy to invest and the term of the Advancr Bonds you select.

Early call risk

Advancr Leasing Limited has the right to repay its Advancr Bonds early. Should this happen the company would return the money you initially invested and the amount of interest that has been earnt and not paid up to that date. This right is included in the Terms and Conditions to allow the company to wind up its business if that was preferable to carrying on. Whilst we don’t believe this is likely, if it did happen the length of your investment could be materially shortened.

Unsecured investments

Advancr Bonds are unsecured loans made by you to Advancr Leasing Limited, which means that there are no assets (like property) that holders of Advancr Bonds have a claim over if Advancr Leasing Limited is unable to pay the loan.

To illustrate, when a bank lends you money to buy a house, it takes security over the house. If you stop making mortgage payments, the bank has the right to sell the house to recover its loan. This is not the case with Advancr Bonds – if Advancr Leasing Limited were to go into liquidation, holders of Advancr Bonds might not be first in line to recover their investment from the assets of the company - they would be paid out alongside other unsecured creditors, after any secured creditors had been repaid, if there are any assets available.

Interest rate and inflation risks

Advancr Bonds pay interest at a fixed rate (e.g. 6.5%) rather than at a variable rate that can change during the life of the Advancr Bond. Fixed rates remove the uncertainty associated with variable rates – however, there is a risk that fixed rates become less attractive if interest rates available elsewhere go up whilst you are invested in the Advancr Bond. Similarly, high inflation could adversely impact your “real” (inflation-adjusted) return over time.

Client money

WWhen you transfer money in order to make an investment in Advancr Bonds, this is initially held in a Client Account. Interest payments and the repayment of your capital will also pass through this account. This account is operated by Triple Point and is currently held with the Royal Bank of Scotland plc. While it is in this account it is protected in the event that either Triple Point or the bank got into difficulty. This is done through the account having trust status and being covered by Financial Services Compensation Scheme, which provides protection of up to £75,000 per person per firm.

Once Advancr Bond investments are processed, money is transferred from the Client Account into Advancr Leasing Limited’s own bank account. At this point the money can be used by Advancr to carry on its trading activities and is held in a business bank account that does not offer the same protections.

Business risk

As with all businesses, good management of Advancr Leasing Limited should mean better financial performance. Poor financial performance may impact the company’s ability to repay the interest and capital due to holders of Advancr Bonds and so it is important for you to understand the risks.

The success of the business depends on a variety of factors which include the quality of its customer base, the quality of its revenue streams, the value of any assets held as security, and their liquidity. In particular, three key risks to the business are:

1. Credit risk
   If the small and medium-sized enterprises (SMEs) that lease assets or borrow money from Advancr Leasing Limited fail to pay for the assets/loans, Advancr Leasing Limited’s ability to pay interest and capital to holders of Advancr Bonds could also be affected. Although Advancr Leasing Limited plans and makes provision for bad debts, if the level exceeded the predictions, this would impact upon the company’s profitability and its own ability to pay interest and/or capital to holders of Advancr Bonds.
   
   SMEs are on average more risky counterparties than larger companies as they may be less prepared for the economic factors (such as interest rate changes, inflation, political and regulatory changes, etc) and company-specific risks which they face.
2. Balancing pipeline with repayments
   A strong pipeline of new leases and lending opportunities for Advancr Leasing Limited is an important part of generating enough revenue to cover overheads and make the interest payments to holders of Advancr Bonds. At the same time, Advancr needs to time these deals in such a way that it has, at any one time, enough money to make any payments due to holders of Advancr Bonds. If Advancr does not achieve this balance effectively, this could impact on its ability to meet payments due to holders of Advancr Bonds.
3. Economic risk
   The businesses which Advancr Leasing Limited lends to (or is entitled to receive payments from) are subject to UK-based economic risk.
   
   If there are adverse changes in the market or in the macro-economy this could cause Advancr Leasing Limited to generate less income than expected which could in turn impact its ability to make payments to holders of Advancr Bonds.

The management team

We have described elsewhere our belief that Advancr Leasing Limited benefits from a highly experienced management team. Conversely, you should bear in mind that the composition of the team could change over time, and during the term of any Advancr Bonds that you invest in. Any such changes could impact on the ability of Advancr Leasing Limited to continue to execute its business strategies successfully and if this affected the company’s revenue this could impact on the ability to pay holders of Advancr Bonds.

Diversification

Your Advancr Bond is an investment into one company only, Advancr Leasing Limited. Although its business model involves leasing and lending to a large volume of SMEs, and therefore diversifying its own risks, your investment is technically concentrated on one company. An investment into an Advancr Bond should therefore only be part of a wider portfolio

Conflicts of Interest

Advancr Leasing Limited’s management team also work for Triple Point Investment Management LLP.

While we have put a structure in place to ensure that Advancr Leasing Limited is provided with sufficient management and operational resource, it is worth noting that this duplication could lead to conflicts of time, resources and interests.

Relationships between different Advancr entities

There are four different legal entities in the Advancr group of companies, which each have their separate business purposes. Monies received from holders of Advancr Bonds will only be used by Advancr Leasing Limited and will not be used to fund costs associated with the Advancr Group.

Relationship between Triple Point Investment Management LLP and Advancr Limited

There is a risk that Triple Point Investment Management LLP could cease to allow Advancr Limited to act as its Appointed Representative, which would render Advancr Limited’s ability to promote its activities non-compliant. This is mitigated by the fact that the individuals in the Triple Point Investment Management LLP team are backing the success of the Advancr brand, however, should this issue arise, Advancr Limited would need to seek an alternative Appointed Representative arrangement, or become FCA authorised in its own right.

Conflicts of allocating deal flow between different Triple Point and Advancr group entities

Triple Point Investment Management LLP and Advancr Limited may be interested in deal flow which is relevant for Advancr Leasing Limited and for other companies seeking finance from Triple Point Investment Management LLP. There may occasionally be a tension between which of the companies’ interests will be prioritised. As a result, a deal allocation policy is in place to ensure that a set process is followed which balances all interests involved.

Co-investment

There are occasions where Triple Point Investment Management LLP will represent different groups of investors which co-invest in particular deals or projects. Whilst the interests of each group must be appropriately considered and protected, this is often advantageous to all of the groups of investors involved. It is not currently envisaged that the leasing and lending activities of Advancr Leasing Limited will be co-invested with any other group of investors or investments managed by Triple Point Investment Management LLP.