Scottish Loan Scheme

The Scottish Loan Scheme (SLS) can provide loan funding of £250,000 - £2m to growth focused Scottish companies.

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The Scottish Loan Scheme (SLS) can provide loan funding of £250,000 - £2m (and up to £5m in exceptional circumstances) to growth focused Scottish companies that have a viable business plan and a clear ability to repay the debt. Loans can be used for a variety of purposes, including working capital, capital expenditure, growth funding and international expansion.

Features

Loan Amounts

£250,000 - £2,000,000 (up to £5,000,000 in exceptional circumstances).

Term

Typically, 1 – 7 years.

Interest

The rate of interest will be determined by assessment of risk and available security.

Repayment Profile

Monthly or Quarterly capital and interest repayments.

Holidays

  • Interest – up to 6 months at start of loan term
  • Capital – up to 12 months at start of loan
  • Both subject to Scottish Enterprise’s discretion.

Security

Typically, Bond & Floating Charge. No requirement for personal guarantees.

Fees

1% arrangement fee. Any external diligence and legal costs borne by company.

Other Features

Companies may request two months deferral of payments within a rolling 24-month period during the duration of the loan. Deferred payments will be repaid as a bullet repayment at the end of the loan term and is subject to Scottish Enterprise’s discretion.

Companies may request to ‘reborrow’ up to 20% of loan capital that has been repaid to Scottish Enterprise under the loan (provided at least 50% of the original capital has been repaid). This additional loan funding will be repaid under the existing terms of the loan. Only one application is permitted and is subject to Scottish Enterprise’s discretion.

Lending Criteria

Companies must be at least two years’ old with minimum turnover of £250k and be profitable (or projecting profitability within the next 12 months).

Companies must have a viable business plan which demonstrates the loan can be repaid.

Companies will need to be headquartered in Scotland, have an operational presence in Scotland or looking to locate to Scotland. Any company needs to be located in Scotland prior to any loan funds being advanced.

The funding needs to secure or maintain economic impact in Scotland commensurate with the level of funding being sought.

Companies will need to demonstrate that they have tried to secure the required funding from other sources or there is a good reason why not.

Companies will need to demonstrate commitment to fair work practices, including the living wage and non-use of exploitative zero hours contracts.

We will not lend into the following sectors:

  • Banking, insurance & sub-prime lending
  • Gambling
  • Adult entertainment
  • Activities with adverse impact on human rights
  • Tobacco
  • Locally traded services

Funding Uses

Loans can be used for a variety of purposes, including:

  • Working capital
  • Capital expenditure
  • Growth funding & international expansion
  • Increased productivity
  • Marketing activity
  • Acquisition funding where acquisition leads to greater economic impact in Scotland.

Application Process

Interested companies should contact Scottish Enterprise and will be asked to complete an initial enquiry form to allow them to assess whether the lending criteria has been met and whether we wish to progress further to a full application. Qualifying companies will then be required to submit the following:

  • Full application form
  • Business Plan
  • Two years of historical annual accounts
  • Three years of forecasts (to include P&L, balance sheet and cash flow forecasts)
  • Details of current borrowing

The business plan and financial forecasts need to clearly demonstrate the company is viable and able to repay the debt within sufficient headroom.

Credit Checks – loan applications will be subject to credit checks of directors and shareholders with over 20% shareholding.

Existing Debt – any existing debt will be taken into account when assessing loan affordability.

On an ongoing basis, companies will be required to provide SE with management accounts (P&L, Balance Sheet & Cashflow), annual budgets and annual accounts. In addition, high-level information on economic impact derived from the funding will be required.

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