Local Authorities and Banks have collaborated to ensure that viable proposals from SMEs do not fail from a lack of access to finance.
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.

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

Difficulties encountered

Because the operations extended from the proven East of Scotland Loan Fund and the West of Scotland Loan fund , the initial challenge was scaling up with broader geographical coverage. From a practical point of view it soon proved difficult to allow each authority as say on the board

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%

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Project
Main institution
Renfrewshire Council
Location
Bedfordshire and Hertfordshire, United Kingdom
Start Date
January 2016
End Date
Ongoing

Contact

Iain Shirlaw Please login to contact the author.