A LOAN fund for small businesses in the east of Scotland is in line for up to £4 million in supporting finance.
Edinburgh Council yesterday revealed it was in talks with the not-for-profit Capital Credit Union to pump £1.3m into the East of Scotland Investment Fund (ESIF). The loan pot will help leverage other money from the European Regional Development Fund.
The contribution from Capital will mark the credit union’s first move into corporate lending after recent rule changes allowed community-based mutuals to offer loans to businesses.
Marlene Shiels, pictured below, chief executive of the Edinburgh-based credit union – which next year will mark its 25th year – said it had a “strong” balance sheet of £21m.
She said: “Capital Credit Union is delighted to be working in partnership with the City of Edinburgh Council to provide loan finance for SMEs to grow and develop their businesses.”
Credit unions provide savings and low-cost loan products for both individuals and businesses.
The announcement is the latest funraising for the ESIF, which unveiled a £5m pot in 2010 supported with a £1.5m injection from Royal Bank of Scotland.
Typically, loans of around £40,000 are expected to be offered to 1,000 small firms.
Councillor Frank Ross, convener of the city council’s economy committee, announced the renewal of the fund at a business breakfast event in Edinburgh. He said: “Small to medium sized enterprises are fundamental to the growth of Edinburgh’s economy. The additional loan fund we are putting at the disposal of small businesses is designed to help make their expansion plans a reality, and create jobs.”
Ross added that since the launch of the council’s “Strategy for Jobs” a year ago, nearly 4,000 people in the city have been supported into work or learning.
He also pointed to the £3.8 billion of investment in infrastructure currently underpining growth in Edinburgh, including the trams project.
Ruth McKay, who chairs the Federation of Small Businesses’ (FSB) in Edinburgh, welcomed the announcement of the loan fund.
She said: “Too many Edinburgh small businesses are still finding it difficult to obtain flexible and affordable business finance.
“We need more institutions competing to supply smaller businesses with the finance they need and this scheme can help to fill this gap.
“We look forward to working with the council to ensure that this scheme works for small businesses.
“Recently, the council has made some real progress to make the city a great place to do business.
“The FSB in Edinburgh applauds this approach which has the potential to thaw post-tram relations with hard pressed retail and non-retail businesses in the capital.”