Evaluation of the Scottish Loan Scheme

The Scottish Loan Scheme (SLS) was launched by Scottish Enterprise (SE) in late 2018. Initially it was to provide debt finance to any size of company. This was later restricted to Small and Medium Sized Enterprises (SMEs), this being the sector of the market where otherwise viable businesses found it hard to raise finance. The Scheme was to provide loans on a commercial basis in the range £0.250 million to £2 million and in exceptional circumstances up to £5 million. At the time of the evaluation 31 loans had been provided to the value of £18.1 million. Five of these had subsequently been repaid whilst there had been two write-offs. The evaluation was to look at the Scheme’s performance against the ambitions set for it in the original approval paper, see if the rationale for public sector support was still valid and assess SLS’s economic impact in terms of employment and GVA.

The approach involved: interviews with investee companies; workshops with the Teams responsible for delivering the Scheme; interviews with senior SE staff; and interviews with other funders.

There is still a clear rationale for public sector loan support. Most of the interviewees had tried to raise support from the other commercial funders and had been unsuccessful. Without SLS it seems likely that they would have either failed or would have been restructured in some way. The Scheme has had a positive economic impact with an additional £21.5 million of GVA being created to date and an Impact Ratio (Net GVA per £1 of SE support) ranging form 3:1 to 8:1 depending upon the impact scenario chosen. The Cost per Job was low. One of the main findings was the extent to which the companies funded valued the advice and support they were given by the Debt Team who delivered the Scheme.

A small number of minor recommendations were made. These included: regular monitoring of demand so that the need for any changes could be identified; the Scheme being more widely marketed and systems put in place to screen out unsuitable applicants; the approval process being speeded up; documentation being improved; loan terms and condition being reviewed and updated if necessary; and covenants being reviewed and potentially standardised.