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Jigthings suffering from cash crunch

Jigthings, a company which sells jigsaw tables, boards, cases, and frames faces major cash crunch during October as it has to order and pay for its stock as there is a shortfall when it comes to balancing the books during these months.

The business now generates around $1.3m (£970,000) in revenue each year – the majority of which comes in over December and January even though it had a slow start.

“Half the time, there is a surplus in the bank, but for those two or three months of the year, there is a considerable deficit,” says Colin King, the owner of this company. After considering funding options he found his choices were limited. As he wanted loads of money, for a very short period it was not appealing to banks at all. Eventually, he turned to his pension, and borrowed £120,000 using pension-led funding.

The Institute of Directors recently called for the government to alleviate the tax burden on entrepreneurs who wanted to use their saved up pension for startup investment. This would be on top of the 25% tax-free allowance permitted once a person turns 55. The remaining 75% is subject to income tax, if withdrawn.One such entrepreneur is Fiona Jarvis, who launched Blue Badge Style in 2012, when she was 57. She withdrew her 25% allowance to fund the website and app, and has continued to dip into her pension to provide herself with an income while the business grows.

Adam Tavener, the chairman of Clifton Asset Management and Pensionledfunding.com that pensions can be a good source of business funding, but he doesn’t agree a higher tax-free threshold is needed.

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