Explanation of Third Party Funding from UK and Overseas

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This topic has been discussed here quite a few times. I am now compiling the relevant information from Policy Guidance (Version 01/2013) for third party funding specifically from UK.

This is a step by step process where guidance first mentions what is required and then specifies the documents that will fulfill those requirements.

Tier 1 (Entrepreneur) - points scoring

Para 24.
Para 25.
Para 26

Attributes for Initial Entry (Sub Heading)

Para 27 Initial Entry means both Entry Clearance and Further Leave to Remain


Entrepreneurial Teams (Sub sub Heading)

Para 28.

Para 29

Claiming Points for Attributes (Sub sub Heading)

Para 30

Para 31 You or your entrepreneurial team can include money made available by other people (known as ‘a third party or parties’, and this can include money from your (or your entrepreneurial team member’s) husband, wife or partner). In this case you must also provide a declaration that the money is available to you and your entrepreneurial team member (if applicable), or to the business that you or your entrepreneurial team are running. You must provide a declaration from each contributor of funds, together with confirmation that the declarations are valid. This para is relevant to the third party funding where it never restricts that you can not have third party funding from the UK.

The same applies to £50,000 funding.

Now all the remaining paragraphs are for the other requirements for example entrepreneurial teams and funds already invested etc.

The next section is what documents are required to prove and score points for attributes.

Documents we require

Para 87.

Para 88

Evidence of the amount of money available to invest

Para 89

Para 90 (The most important para for third party funding)

You must provide one or more of the following documents:
• a letter from a financial institution (whether it is from UK or from Abroad, a letter is the only acceptable form of proof for money from your own account or from a third party account);

• for money held in the UK only, an account statement; (An account statement is ALSO a form of acceptable evidence only if it is in the UK and fulfills the conditions of Para 93. Para 93 states that the account statement is only acceptable if that is in your own name and not in a third party name. So if there is third party UK funding then first option applies and you need to provide the letter as mentioned in the first option above)

• for money from a Venture capital firm, seed funding competition or UK
Government Department or Devolved Government Department, a letter from an authorised accountant

Para 91

This para explain the "letter from financial institution" whether it be in the UK or abroad or money is from third party or on your own name.

Para 92
Para 93

Both Para 92 and Para 93 explain the "account statement" in the form of evidence. So an account statement is acceptable form of evidence only if it fulfills all the following conditions that excludes third party.

The statements must be original documents and not a copy.
• The bank or building society holding the money must be based in the UK and regulated by
the FSA;
• The money must be in cash in the account. We will not accept ISA accounts or assets such as stocks and shares;
• The account must be in your own name only (or both names for an entrepreneurial team) only. Accounts in the name of a business or third party will not be accepted;
• Each bank or building society statement must be on the institution’s official stationery and confirm each of the following details:
o Your name; or your name and your entrepreneurial team member’s name;
o The account number;
o The date of the statement;
o The financial institution’s name and logo;
• The bank or building society statement must have been issued by an authorised official of that institution


Example

Money in own UK bank account = £90,000
Money in third party name in UK bank account = 110,000

If you have £90,000 in the UK in your own name and £110,000 in a third party name based in the UK then for £90,000 Para 92 and Para 93 applies and for £110,000 Para 91 applies. So you will be submitting a UK Bank Statement showing £90,000 funds in your own name if you can fulfill all the conditions of para 93 and also a letter from a UK bank from third party for £110,000 so these two pieces of evidence will make up your £200,000 funding all from the UK.

If you can not fulfill all the conditions of para 93 for £90,000 and can fulfill the condition of para 91 then you can submit a letter in stead of bank statement for this £90,000 also..

I hope this will help.