Small- and medium-sized businesses are the backbone of the Scottish Economy, with 99.3% of all private sector businesses falling into the SME category (Scottish Government, March 2018). They provide around 1.2m jobs and are a key employer in rural areas of Scotland. Despite their importance, it has become more difficult for SMEs to find and raise funding that is right for their business.
Funding Gap for Scottish SMEs
While there are now more investors than ever on the market, the debt finance provision is falling behind. As traditional high street lenders have changed their risk appetite after the recession in 2008, smaller and less established companies are struggling to find loans to finance their growth. Traditional debt funding is also not an option for companies that purely rely on intellectual property (not an acceptable form of collateral) or are in long-term research Life Science fields (too much uncertainty around the product).
In order to fill this funding gap and give companies more options, both public and private sector will have to work together. Alternative lenders and specialist funds are already seizing the commercial opportunity and are supporting businesses with flexible loans. Another recent initiative is the second phase of the Scottish Government’s Scottish Growth Scheme, partly funded by the European Regional Development Fund. This £100m fund has been allocated to 6 different fund managers in microfinance, debt finance and equity to boost the Scottish economy and provide finance to businesses that previously struggled to raise appropriate funds.
BE Group Debt Finance Scotland’s Mission
As part of the Scottish Growth Scheme, our £12m loan fund is available to any Scottish SME trying to grow their business. The loans range from £25,000 to £100,000 and can be used for a wide range of purposes including capital investment, exports, innovation and product development.
Our fund director, Thomas Brock, is very adamant about the potential he sees for this fund: “What we’re trying to achieve is to disrupt the market to an extent. We want to be a fast, efficient lender who understands SMEs, who can quickly reach a decision based on a robust approach. We will get the money out to companies quickly, so they can exploit their commercial opportunities. We also want to innovate within the terms of the Scottish Growth Scheme and think differently to traditional banks.”
One of the companies utilising this fund is Innovair, an Aberdeen-based Industrial Robotics company providing innovative surveying and inspection solutions to a range of industries. With their state-of-the-art robotic solutions, they operate in increasingly complex and challenging environments thus removing people from harm and reducing costs for their customers.
Stuart Lawson, solutions director at Innovair, said about the fund: “This loan is going to help us implement innovative robotic solutions, invest in marketing and generally take our business to the next stage. We were impressed by the straightforward application process and the quick turnaround by the BE Group Debt Finance Scotland team. There is not a lot of funding as accessible and well supported as this on the market and it really makes a difference for small companies like ours.”
We are attending TUBS 2019! If you have questions about the loan fund find us at stand number 74, reach out at debtfinancescot@be-group.co.uk or visit our website.
