Scottish Microfinance Fund launched to help firms access finance

Today (21 December) marks the launch of a new £6 million microfinance fund whose aim is to make small loans more accessible to businesses throughout Scotland. The funding is part of a larger £40 million boost from the Scottish Government’s SME Holding Fund.

The Scottish Microfinance Fund (SMF) is a Scottish Government initiative supported by the European Regional Development Fund (ERDF), DSL Business Finance (DSL) and The Start Up Loans Company (SULCo) and aims to provide improved access to finance with very competitive terms. The fund offers an interest rate of six per cent and no arrangement or early repayment fees.

All applicants receive face-to-face pre loan and aftercare support from a dedicated DSL loan officer who all work closely with the Business Gateway and other support agencies across Scotland. To support delivery of the new fund DSL has recruited loan officers in Dundee and Inverness and also added to their support staff to ensure business owners receive the best possible support with the application process and business plans , whether this be for start-up or growth.

Stuart Yuill, executive director, at SMF commented on the launch. He said: “With small businesses in Scotland adding more than 46,000 new jobs in 14/15 and 94% of Scotland’s employers having nine or less employees, the opportunity to support economic growth by funding small businesses is significant.

With the support of Scottish Government, ERDF funding and our funding partner SULCo, the Scottish Microfinance Fund is able to improve access to finance in this key segment of our economy. Working effectively with other partner agencies we aim to ensure that the client experience is a very positive one that delivers real funding support for new and growing businesses such that SMF becomes the ‘go-to’ microfinance lending provider in Scotland.”

To support the wide and diverse range of businesses across Scotland who feel they would benefit from a microfinance loan the SMF has a range of funding options to flex and suit a variety of needs.

Nadia Di Vaio runs Café Bellina with her brother Luigi and Natalie Ferguson and recently benefited from a business loan from the Scottish Microfinance Fund provider, DSL. She believes that fair and accessible microfinancing is a crucial key to giving small businesses the funding boost they need:

“At Café Bellina, our first goal is to make people feel at home whilst tasting our homemade Italian specialities. We cook everything from cakes and arancini, to pasta, pastries and paninis. Everything is made with passion and care for detail.

“Finding the finance to open a cafe hasn't been easy at all, one bank completely ignored our request for a loan and a second one refused our application. Thanks to Business Gateway, we were referred to DSL Business Finance which runs the Scottish Microfinance Fund. We met with Nicola, an excellent loan officer in Glasgow, who helped us develop our business plan and to present our business growth project to a panel, which resulted in a loan. It's great that the Scottish Microfinance Fund will provide emerging entrepreneurs who may not be able to access traditional finance the chance to follow their dreams. It really made a difference to Café Bellina and Nicola still follows our progress as a business mentor.”

Cabinet Secretary for Economy, Jobs and Fair Work, Keith Brown, announced the fund as part of £40 million investment into Scottish business. He said,

“Small to medium sized enterprises represent 95% of businesses, it’s crucial that we do all we can to help them thrive so we can boost economic and productivity growth and deliver a more competitive and inclusive economy. Businesses like Café Bellina are a great example, providing a service to the local community as well as employment opportunities. We want the right help to be available to entrepreneurial Scots at the right time.”

Businesses that are successful in applying for SMF funding will sign-up to a competitive interest rate (6%). They will also not be burdened by any arrangement fees or early repayment fees.