Finance provider Growth Street is targeting a £60 million share of the SME lending market in Scotland after its move north of the Border.
The London-based peer-to-peer lending platform estimates that there is an £800 million funding shortfall faced by small and medium-sized firms in Scotland that it aims to help bridge.
The fintech, which recently appointed a Glasgow-based business development manager to spearhead its expansion into Scotland, said the move comes amid a growing squeeze on overdraft facilities available through traditional lenders.
Research by Growth Street, which has 2,500 investors on its platform including private individuals and family offices, found that the total overdraft limit available to Scottish SMEs has been on the decline in recent years.
It claims this is due to increasing reluctance from banks to extend overdrafts to small firms, a trend it says picked up in the wake of the credit crunch.
Greg Carter, chief executive of Growth Street, said overdraft facilities available to businesses in Scotland “are in short supply”.
He added: “Scottish businesses face a significant void in their funding, which might result in an everyday working capital squeeze.
“Growth Street wants to lead the charge to fill the hole left by the banks.”
The platform lends up to £2m to businesses with an average turnover of £3m and investors receive an annual return of around 5 per cent.
Thomas Hoegh, Growth Street co-founder who has also invested in companies including Glasgow-based film distribution firm Park Circus, told The Scotsman that the platform had been looking to launch in Scotland for some time but faced delays due to the different legal requirements to England.
Hoegh said the platform was a technology-based offering to help meet the changing funding needs of smaller businesses.
Firms borrowing from Growth Street link up their cloud accounting software to the platform and allow access to transaction data using the Open Banking framework.
The company says that enables applications to potentially be approved quicker and gives it greater insight into the individual needs of a business.
Jennifer McGuffie joined the team as business development manager in April. She previously worked as regional director for Ultimate Finance Group and has also worked for Bibby and Lloyds.
Growth Street was launched in 2014 and has now facilitated more than £100m of borrowing through its platform in England and Wales.
Earlier this year, the firm announced a £7.5m round of funding led by Merian Global Investors.