Scottish Loan Scheme
Loans for working capital, capital expenditure, growth funding, expansion in international markets and marketing investment.
Contents
What is the Scottish Loan Scheme?
The Scottish Loan Scheme can provide loan funding of £250,000 to £2 million to growth-focused Scottish companies that have a viable business plan and a clear ability to repay the debt.
Loans can be used for a variety of purposes, including:
- Working capital
- Capital expenditure
- Growth funding
- International expansion
- Marketing investment
Am I eligible for a loan?
To be eligible for investment from the Scottish Loan Scheme:
- Your business must be based in Scotland or ready to locate to Scotland (and located in Scotland before any loan funds are made available)
- You must have a viable business plan which demonstrates you can pay back the loan
- You must demonstrate that you have tried to get funding from existing funders or there is justifiable reason why you have not
- Your company should have two years' trading history with a minimum £250k turnover and be profitable (or projecting profitability within the next 12 months)
- The loan funding needs to secure or maintain economic impact in Scotland commensurate with the level of funding being sought
- Your business must support fair work practices, including paying the Living Wage, with no inappropriate use of zero hours contracts or exploitative working patterns
Restrictions
The fund is not sector-specific but certain sectors may be restricted.
This includes goods, services or activities in well-served markets — unless you have a disruptive business model, for example:
- Banking, insurance, sub-prime lending or other activity where there is onward lending or credit risk including hire purchase and dealing in land, derivatives or commodities
- Businesses whose trade is limited to a local area, and whose direct competitors are other local businesses, including shops and retail (sale of third-party goods)
- Events, restaurants, hotels, pubs and clubs
- Social and personal services
- Professional services
- Motor vehicles
- Real estate and property development
Any activity that could have a negative impact on our organisation's reputation or ethical standards is restricted. This includes the use of technology aimed at facilitating the following:
- Activities with an adverse impact on human rights or the environment
- Gambling
- Tobacco
- Adult entertainment
- Weapons and ammunition
Terms and conditions
Features
|
Loan amounts |
£250,000 to £2,000,000 |
| Term | Typically, 1 to 7 years |
| Interest | The rate of interest will be determined by assessment of risk and available security |
| Repayment profile | Monthly or Quarterly capital and interest repayments |
| Holidays | Interest – up to 6 months at start of loan term Capital – up to 12 months at start of loan Both subject to Scottish Enterprise discretion |
| Security | Typically, Bond and Floating Charge. No requirement for personal guarantees |
| Fees | 1% arrangement fee. External diligence and legal costs borne by company |
| Other features | Companies may request two months deferral of payments within a rolling 24-month period during the duration of the loan. Deferred payments will be repaid as a bullet repayment at the end of the loan term and is subject to Scottish Enterprise’s discretion. Companies may request to ‘reborrow’ up to 20% of loan capital that has been repaid to Scottish Enterprise under the loan (provided at least 50% of the original capital has been repaid). This additional loan funding will be repaid under the existing terms of the loan. Only one application is permitted and is subject to Scottish Enterprise’s discretion. |
How to apply
Step 1 - Make an initial enquiry
Complete the initial enquiry form (DOCX, 95 KB, 7 Pages)opens in a new window and send it to scottishloanscheme@scotent.co.uk. We may arrange a meeting with you to discuss your plans further, and how much you may be eligible for.
Step 2 - Submit a full application
Qualifying companies will be required to submit the following:
- Full application form
- Business plan
- Two years of historical annual accounts
- Three years of forecasts (to include P&L, balance sheet and cashflow forecasts)
- Details of current borrowing
The business plan and financial forecasts need to clearly demonstrate the company is viable and able to repay the debt within sufficient headroom. Loan applications will be subject to credit checks of directors and shareholders with over 20% shareholding. Any existing debt will be taken into account when assessing loan affordability.
Step 3 - Report on progress
If your loan is approved, on an ongoing basis, you'll need to provide us with management accounts (P&L, balance sheet and cashflow), annual budgets and annual accounts. High-level information on economic impact derived from the funding will also be required.
Get in touch
If you’re interested in applying or just want some more information, get in touch to discuss your business and project.