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Business Loan Scotland
Published on 06 March 2019
United Kingdom
Bedfordshire and Hertfordshire
This is the good practice's implementation level. It can be national, regional or local.
About this good practice
BLS was proposed following the activities of the East of Scotland Loan Fund (set up by Fife Council) and the West of Scotland Loan Fund and the . In 2016, the Scottish Government announced a new SME holding fund to give companies access to microcredit finance of up to £25,000, loans of up to £100,000 (BLS) and equity investment of up to £2 million.
The primary focus for Business Loans Scotland is in the Business to Business (B2B) and Business to Consumer (B2C) categories. BLS supports the following: Limited Companies, Partnerships including Limited Liability Partnerships (LLP’s) with 4 or more partners, Partnerships including Limited Liability Partnerships (LLP’s) with 3 or fewer partners (loans over £25,000 only) Sole Traders (loans over £25,000 only). Businesses may operate as a Social Enterprise or Co-operative
Loans may be used for Working capital, purchase of plant and equipment, purchase of business property
The SME Holding Fund will distribute European Regional Development Fund investment worth £40 million, to be matched by a total of £60 million from delivery partners, including Business Loans Scotland Local authority participants.
The interest rate will be fixed at 6% for the term of the loan. The interest rate may be higher for new businesses with a poor credit rating and low levels of security. No other fees or charges will be applied. The maximum repayment period is 5 years, although 'capital holidays', up to 3 months, may be considered.
The primary focus for Business Loans Scotland is in the Business to Business (B2B) and Business to Consumer (B2C) categories. BLS supports the following: Limited Companies, Partnerships including Limited Liability Partnerships (LLP’s) with 4 or more partners, Partnerships including Limited Liability Partnerships (LLP’s) with 3 or fewer partners (loans over £25,000 only) Sole Traders (loans over £25,000 only). Businesses may operate as a Social Enterprise or Co-operative
Loans may be used for Working capital, purchase of plant and equipment, purchase of business property
The SME Holding Fund will distribute European Regional Development Fund investment worth £40 million, to be matched by a total of £60 million from delivery partners, including Business Loans Scotland Local authority participants.
The interest rate will be fixed at 6% for the term of the loan. The interest rate may be higher for new businesses with a poor credit rating and low levels of security. No other fees or charges will be applied. The maximum repayment period is 5 years, although 'capital holidays', up to 3 months, may be considered.
Expert opinion
Business Loan Scotland could have replication value in other contexts as well and it could inspire policy-makers elsewhere who are thinking about setting up similar financial support instruments. BLS, which was based on other loan instruments in Scotland, has proven to be a well working instrument for providing support specifically targeted at SMEs to increase their access to funding opportunities. The evidence of success suggest that not only has the measure supported business growth and attaining new markets, it has also helped companies to remain in business and safeguard jobs.
Works at
Interreg Europe Policy Learning Platform
Resources needed
An administration function is supported by the European Regional Development Fund contributing £3,253,200 of funding
Evidence of success
Over half of the supported companies operate in the Government key sectors. Attributable Impacts:
Jobs Created 648 GVA £26m
Jobs Safeguarded 1,056 GVA £42m
From a survey the majority of funding contributed to the ability grow through diversification and ability to enter new markets
Remaining in business 41
Expanding and growing 40
Entering new markets 29
Developing/diversifying new products/processes 30
Increasing productivity /output 32
Jobs Created 648 GVA £26m
Jobs Safeguarded 1,056 GVA £42m
From a survey the majority of funding contributed to the ability grow through diversification and ability to enter new markets
Remaining in business 41
Expanding and growing 40
Entering new markets 29
Developing/diversifying new products/processes 30
Increasing productivity /output 32
Potential for learning or transfer
Main complaint from users of the funds was the apparently bureaucracy and time taken to get approvals. BLS has learned from this and adopted a more on-line approach and more active support from Business Gateway advisers. The other comment was the apparently high rate of interest at 6%
Further information
Website
Good practice owner
You can contact the good practice owner below for more detailed information.
Organisation
Renfrewshire Council
United Kingdom
Bedfordshire and Hertfordshire
Contact
Economic Advsier - Investment