The Scottish Microfinance Fund (SMF) is managed and delivered by community development finance institution DSL Business Finance with additional support from the Start-up Loans Company and European Regional Development Fund.
It recently held a parliamentary reception at Holyrood to celebrate its first birthday, and has lent to more than 130 new and existing firms, helping create more than 200 jobs in the last year.
The fund has a dedicated £6m pot to lend SMEs up to £25,000, and is part of a larger £40m boost from the Scottish Government’s SME Holding Fund. Interest is 6 per cent a year, and it imposes no admin or early repayment fees, or hidden charges.
DSL executive director Stuart Yuill said: “We are approached by a huge variation of SMEs from all industries; from dental design studios and cafés to clothing and fashion companies.
“Taking the leap to start your own business is a daunting prospect for many entrepreneurs, especially in today’s economic and political climate, which is tough to adapt to. But there is huge potential for the SMF in 2018, and we’ve been heartened by the number of people we’ve been able to assist in Scotland… we’ve doubled our own team, with plans to recruit another loan officer for Edinburgh.”
SMF beneficiaries include Mike Stalker and Natalie King, founders of SK Dental Design Studio, who used its loan support to fully equip and fit out their studio as well as help with cashflow until the business becomes established.
Stalker said: “We wouldn’t be here without the support of DSL and the SMF. We approached the banks for a loan, and they simply were not interested.”
The parliamentary reception was sponsored by Gail Ross MSP with a keynote address from economy secretary Keith Brown on the importance of continued business growth in Scotland.
The fund aims to help tackle the much-cited issue of firms, particularly in Scotland, struggling to secure the funding required to achieve their scale-up goals.
The inaugural Scottish Start-up Survey published last year found that 95 per cent of respondents said they needed extra capital to move their business forward, and seeing it as a bigger immediate concern than Brexit, for example.
Additionally, a study from Barclays published in November found that in 2016 the number of Scottish high-growth firms fell to 171 from the previous year. However, UK Chancellor Philip Hammond the same month unveiled in the Autumn Budget £2.5 billion for the British Business Bank, to support UK smaller firms looking to scale up and realise their potential.