To borrow (more) or not to borrow is the conundrum facing many Scottish business leaders. As we recover from the pandemic and the future starts to look brighter for many, there will be much contemplation on how to fund business opportunities, whether to seek additional debt finance, to raise equity or fund from organic cashflow.
Many businesses have been able to positively navigate complex trading challenges and are finding market recovery is yielding opportunities to accelerate growth – and they want to make the most of this momentum.
In 2018 Scottish Enterprise launched the Scottish Loan Scheme, complimentary to Scottish Enterprise’s long established co-investment equity funds – strategic tools in stimulating what has been tremendous growth in Scotland’s equity risk capital market. We have been investing directly in early-stage, ambitious, high growth businesses for nearly two decades, working in partnership with private sector investors – from Scotland to New Zealand. Our equity funds and loan offering help unlock and fast track growth plans for many.
The Scottish Loan Scheme is targeted at companies that are profitable, or close to profitability, where sufficient private sector lending is not available for the working capital or capital expenditure needed to support growth in domestic and international markets.
With commercial lending from £250,000 to £2,000,000 and repayment terms of up to seven years, there is a wide range of companies which have already used the Scottish Loan Scheme to take advantage of market opportunities in sectors such as food and drink, laser technology, energy and recruitment – to name just a few.
Foodmek Ltd is one such innovative company which used the Scottish Loan Scheme to introduce new production lines as part of its Covid-19 response that differed from its usual business trade of designing, manufacturing and installing engineering solutions for a range of industries such as food and drink, cosmetic and pharmaceuticals.
The pandemic has demonstrated the fragility of growth plans, and has changed the way deals are considered, with many funders being increasingly risk averse, but the future success of our economy is reliant on opportunities being unlocked to deliver good, green jobs and positively contribute towards a more sustainable economy. With Covid-19 restrictions easing across the country and reported growth of 0.9% in the UK economy we are slowing seeing companies start to borrow again.
By providing gap funding to those companies demonstrating fair work practices based in Scotland or considering Scotland as a location, the Scottish Loan Scheme could be an alternative option for many to accelerate their growth plans once more. Further details on what companies need to apply can be found on our website www.scottish-enterprise.com/investment