West/East of Scotland Loans

A secured loan is a way for homeowners to borrow against the equity in their property. Most IFA’s or Mortgage Advisors will immediately think to remortgage a client who is trying to raise extra money from their property. However in a lot of cases this may not be the best option for them.

Often it doesn’t make sense to remortgage and sometimes it is not possible due to the client’s circumstances. Below are examples of when a secured loan should be considered for your client:

  • Is in a tie in period with their current mortgage lender
  • May incur ERC if currently on a fixed rate
  • Wants to borrow money quickly
  • Needs to borrow up to 85% of their property value
  • Has been turned down for a further advance
  • Has only been self employed for a short time
  • May have some adverse credit registered
  • Clients looking to consolidate existing debt
  • Where funds are required for business purposes
  • Clients looking to raise funds on a buy to let property

There are hundreds of different plans available and we can normally find one to suit most clients.

West and East of Scotland Loan Funds

The West of Scotland Loan Fund Ltd (WSLF) is a unique consortium of twelve local authorities working together to provide loan finance to new and existing small and medium sized businesses within the west of Scotland. Applications are handled by advisers working for each of the local authorities.

Applications are welcomed from businesses operating as a sole-trader, partnership, limited liability partnership, social enterprise or limited company.

Businesses from a range of sectors can apply to WSLF for funding. Whilst the Fund may have at one time been associated with traditional manufacturing sectors, this now only accounts for a minority of the businesses supported and we aim to support a broader spectrum of businesses which offer growth and employment opportunities.

Each loan will be subject to a tailored loan agreement. This is a legal document that will be prepared once a loan is approved.

Loans up to £50,000 are available to existing businesses trading for more than 2 years, while loans up to £30,000 can be arranged for new or existing businesses trading for a shorter period.

The interest rate is currently 5%, fixed for the period of loan. The maximum repayment period is 7 years, although 'capital holidays', usually 6 months may be considered. As a generality, loans under £20,000 will require no legal security. However the right is reserved to take security on loans below £20,000 where it is appropriate to protect the investment. Security is usually taken in the form of a floating charge over the assets of the business or standard security.

The fund will normally operate in conjunction with other commercial lending agencies and applicants must demonstrate that at least 50% of the total funding package is being provided by the private sector.

Who Can Apply

The Fund will prioritise its investment in businesses engaged in business to business activities and those businesses which demonstrate they will create added value and jobs without causing local displacement.

The Fund will consider investing in sectors which support national, regional and local economic development, regeneration, town centre and rural diversification strategies and priorities.

The fund will not invest in businesses which are precluded by State Aid rules and will not normally invest in businesses which do not create added value and contribute to national, regional and local priorities and strategies.

As a guideline the following sectors are likely to be eligible for support.

  • Manufacturing
  • Service to Manufacturing
  • Construction
  • Wholesale
  • Transport and Distribution
  • Software Development
  • Agriculture linked to farm diversification
  • Tourism & tourism infrastructure
  • Service based (providing they are not one of the ineligible sectors)

The following sectors are not normally eligible for support.

  • Sale of Motor Vehicles
  • Real Estate / Speculative Property Development
  • Professional Services
  • Social and Personal Services
  • Local Services

Further advice and guidance is available from your local authority representative. If you apply through the Online Loan Application system, an adviser will contact you.

What the Loan can be used for

Loans can be used for the purchase of plant and equipment (new or used), for the provision of working capital and the purchase of property. Loans cannot be used for speculative property development or to obtain private cars.

The East of Scotland Investment Fund (ESIF) offers loans of up to £50,000 to new and growing, small and medium sized businesses.

Their aim is to ensure that good, commercially viable proposals do not fail from a lack of access to finance. Additionally, they want to encourage and support the creation, development and growth of businesses within each of the nine local authority areas which will in turn be able to contribute to, and strengthen, their local economy in terms of jobs, growth and wealth.

ESIF as a public sector owned fund can provide up to 50% of the funding package required to help start up and grow your business. In addition, ESIF in conjunction with any other sources of public funds will not contribute more than 50% of the funding package therefore the balance of the funding package must be

ESIF is modelled on the successful West of Scotland Loan Fund which has earned an outstanding reputation for assisting businesses over the last 14 years when other conventional sources of gap funding have not been able to fully fund projects. ESIF has secured funding of £5 million from the nine local authority members, the Royal Bank of Scotland and the European Regional Development Fund.

We can assist in the application process and in finding other matched sources of funding.

For more information please contact Iain Sim or Gill Groom.

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