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Business loan fund
The new Scottish Loan Fund (SLF), worth £55 million, is now open to applications for loans from eligible businesses across Scotland.
The fund will provide loans of between £250,000 and £5 million and will target those companies which demonstrate growth or the intention to grow and exporting firms, as they have the most to contribute to Scotland's economic growth.
Speaking following the announcement, John Swinney said that the SLF will be managed by independent fund managers, Maven Capital Partners, who will develop an increased presence in Scotland specifically for that purpose.
The Finance Secretary was also able to announce an additional £5m in public sector investment has been secured for the Highlands and Islands, further strengthening the fund's availability to eligible firms across all of Scotland.
And further work is ongoing with the potential to bring in further considerable private sector investment to boost the SLF even further.
Mr Swinney said:
"Scotland's economy is strengthening. We are the only nation in the UK with rising employment and falling unemployment. After a shorter and shallower recession than the UK as a whole, the latest GDP figures show growth continuing to take hold.
"Crucial to these positive signs has been the swift and decisive action the Scottish Government took through its economic recovery plan. News that the Scottish Loan Fund is open for business is a vital part of the ongoing delivery of that plan and great news for Scottish companies and our economy as a whole.
"The £55 million fund will provide vital support for companies in two key areas - supporting our exporters and addressing the issues with access to finance that we know have held back companies with real potential for growth.
"We have now selected Maven Capital Partners as the fund managers for the Scottish Loan Fund. This is an excellent outcome and one that ensures that the Loan Fund will be run on sound commercial principles, maximising the potential returns to the Scottish economy.
"We are working closely with Maven to ensure that potentially eligible companies seeking loan finance are aware that the fund is now open for business.
"I am also very pleased to say we have added a further £5m to the original £50m resources available for the Fund thanks to an extra £2m in ERDF, secured under the Highlands and Islands Programme, matched with £3m commitment from Highlands & Islands Enterprise. This brings the total public sector commitment to £55m, and further strengthens the Loan Fund's availability to eligible firms right across Scotland."
Andrew Craig, Partner at Maven, Glasgow said: "As one of the UK's most experienced and active private equity fund managers and with many years experience of investing and supporting UK SMEs, the team at Maven is delighted to be working with the Scottish Investment Bank to deliver the objectives of the SLF. Given the challenging conditions for the economy, there is a clear need for this type of funding and our current Scottish based investment team are very much open for business and look forward to working in partnership alongside Scottish SMEs."
The STUC's Stephen Boyd said: "The STUC enthusiastically welcomes the additional support for growing Scottish companies to be provided through the Scottish Loan Fund.
"The STUC has long identified the inability of companies to access affordable, committed capital as a key structural problem in the Scottish economy. The announcement of the new Fund represents the latest important step along the Scottish Investment Bank's evolution into an institution that will make a genuine difference.
"At a time when many are questioning their value, it is important to recognise the role of Scottish Enterprise and Highlands and Islands Enterprise in the development of the Fund and the range of investment support mechanisms already available through the Scottish Investment Bank."
Iain McMillan, Director - CBI Scotland, said: "CBI Scotland is pleased to see the launch of the Scottish Loan Fund. At a time of continuing tightness in the credit markets, this fund is a welcome addition to the range of lending options available for businesses in Scotland. The Scottish Government deserves credit for developing this facility for Scotland's business community."
David Watt, Executive Director - Institute of Directors (IoD) Scotland, said: "Access to funding remains the biggest limitation to growing Scottish businesses right now. In particular expansion and internationalisation which are vital to getting our economy back on track are dependant on the necessary financial support being available. The IoD in Scotland welcomes this initiative."
Scottish Enterprise Chief Executive, Lena Wilson said: "It is extremely rewarding and exciting to see the Scottish Loan Fund ready for business after many months of hard work competitively procuring a high quality fund manager. The fund will complement the Scottish Investment Bank's existing equity finance funds by supporting established growth and exporting businesses as they continue to experience difficulty in raising finance in the current economic climate."
Highlands and Islands Enterprise Chief Executive Alex Paterson said: "We know from talking to our business clients across the Highlands and Islands that many have been finding it harder to access debt capital since the 2008 banking crisis. The creation of the Scottish Loan Fund is an important step in addressing this issue. The Fund will be particularly helpful to ambitious businesses which are currently struggling to obtain commercial funding."
The Scottish Investment Bank is now working to ensure the finance available through the Scottish Loan Fund gets out to the companies that need it as soon as possible. Decisions on loan applications will, rightly, be entirely a matter for Maven as the fund manager. Potential applicants will be given the fund manager's contact details to take forward their interest - see below.
If you are interested in the Scottish Loan Fund, please call the fund manager on the dedicated helpline 0844 573 8460 or e-mail enquiries can be sent directly to Maven Capital Partners UK LLP at firstname.lastname@example.org. The help line will be open Monday to Friday 9am to 5pm. The helpline is intended to be an initial check on an enterprise's eligibility for funding from the SLF and to gather initial information that can be passed to Maven Capital Partners.
The Scottish Investment Bank (SIB) supports the development of Scotland's private sector SME funding market to ensure both early stage and established businesses with growth and export potential have adequate access to growth capital.
SIB operates a suite of investment funds. Each fund adopts a highly innovative co-investment and shared risk intervention model to encourage more private investors to invest in early stage Scottish companies with high growth potential.
As with the existing SIB equity funds, eligible firms borrowing from the loan fund will be offered access to the account management services provided by SE and HIE to firms with the potential to contribute most to our national and regional economies.
Scottish Loan Fund Q&A:
What types of firm will be eligible to apply?
Established SMEs (broadly, firms with up to 250 employees) in Scotland with annual turnover above £1 million across most sectors of the economy will be eligible. The Fund targets SMEs which demonstrate growth or the intention to grow and exporting SMEs, as they have the most to contribute to Scotland's economic growth.
What market gap will the Loan Fund target?
The Loan Fund will conventionally lend to firms which, though established and viable, may not be able to offer the extent of security or earnings cover typically sought by a bank or other commercial lender. The cost of borrowing will likely reflect this higher degree of risk.
Eligible firms will be able to apply for loan amounts in the range £250k to £5m, though the great majority of loans will be for amounts of less than £2m.
What types of loans will be offered and what will be the cost to borrowers?
The fund manager will negotiate individual loans on a fully commercial basis, taking into account the particular circumstances of each borrowing company. Most loans, however, will likely have repayment terms of between three and seven years.#