£6m microfinance fund aims to help small firms create jobs in Scotland

THE Scottish Government has launched a £6 million microfinance firm that will provide loans worth up to £25,000 to qualifying small businesses.

The Scottish Microfinance Fund has been designed to make loan funding more accessible to firms as part of official efforts to boost a sector that plays a key part in supporting employment.

It is open to applications from businesses that employ fewer than 10 people and aims to provide improved access to finance by offering what officials described as very competitive terms. The fund, unveiled by Economy Secretary Keith Brown, charges an interest rate of six per cent and imposes no arrangement or early repayment fees.

Early recipients include Cafe Bellina, Edinburgh, run by Nadia Di Vaio with her brother Luigi and Natalie Ferguson “Finding the finance to open a cafe hasn’t been easy at all, one bank completely ignored our request for a loan and a second one refused our application,” said Ms Di Vaio.

Glasgow-based DSL Business Finance, the not-for-profit lender formerly known as Developing Strathclyde Limited, will administer the fund and provide 10 per cent of its capital.

Executive director Stuart Yuill said with 94 per cent of Scotland’s employers having nine or fewer staff there are significant opportunities to support economic growth by funding small businesses.

The European Regional Development Fund will provide up to £2.4m for the microfinance fund. The Start Up Loans Company will contribute £3m.