Cabinet disappointment as Business Loans Scotland wraps up
At Cabinet this week Councillors across the board expressed disappointment as they heard how availability of loan funding for small and medium sized enterprises (SMEs) all over Scotland has come under pressure with the decision of the Scottish Government to discontinue funding for Business Loans Scotland (BLS)
A purpose built consortium, working with all of Scotland’s 32 local authorities, BLS had administered a number of funds providing loan finance throughout Scotland ever since its inception in 2019. It specialised in providing loans from £25k to £250k to plug gaps in funding to SMEs which were unable to secure sufficient funding from commercial providers.
In East Ayrshire this funding proved invaluable in supporting economic growth and Community Wealth building priorities.
From the time funding started in January 2019, BLS issued a total of 190 loans valued at £16.2m to 166 businesses in 26 local authority areas. With an average loan of £85,000. It helped to create 658 new jobs and led to an increase in sales of £309m.
As host authority, East Ayrshire Council housed the seven strong BLS staff in their Ingram Enterprise Centre, Kilmarnock. Two people are now being employed to oversee the final phases of the scheme, which will continue to collect repayments until 2029, all the other team members were made redundant by BLS in August.
Commenting on the move, Councillor Iain Linton, Cabinet Member for Economic Growth said: “While local authorities across Scotland lobbied strongly to keep the fund, the Scottish Government announced that it would discontinue funding in July 2024, citing the deeply challenging financial situation compounded by a reduction in the financial transactions budget.
“The withdrawal of this funding reduces finance options available to local SMEs, especially those unable to access commercial lending. Whilst other institutions such as the British Business Bank and Scottish National Investment Bank (SNIB) continue to operate, the unique local authority led model of BLS, trusted by SMEs for its accessibility, is unlikely to be replicated in the short term.
“This causes a major issue for East Ayrshire, where difficulties in accessing affordable finance is often cited as a persistent barrier to growth.
“We do hold a balance of £912k in the BLS fund which we will now draw down. Our Economic Development team will now take time to consider the best way to use this funding to continue to provide as much effective Business Support assistance as possible to our local enterprises.
“We will also be working closely with all our regional and government partners to identify and access alternative funding mechanisms. We know the difference which reasonable finance can make to growing businesses and we want to build on our established successes in this field in line with our economic growth priorities.”