Access to funding

Published: 15 Aug 2014 09:30

Spotlight on Innovation

Andrew Dickson, fund manager of the East of Scotland Investment Fund, has some advice for Fife businesses on how to access funding.

AMID reports of an improving economic situation there is further good news for Fife businesses as the East Scotland Investment Fund announces that it has new funds to offer loans of up to £50,000 this year. The Fund is open to local companies in a bid to help create jobs, develop new market opportunities and boost the local economy.

More than £3 million has already been granted to companies since the Fund’s launch in 2011 and over 900 jobs have been created or safeguarded.

“Accessing affordable new finance remains a challenge for some businesses, which is why initiatives like this are so important. We are certainly seeing the number of applications increasing,” says Dickson.

“Although we offer funding to start-up businesses, the vast majority of our applicants are established SMEs, looking for substantial funding to develop their business. The common message from them is that the terms from banks and other sources of finance are much too onerous.

“Working across the regions covered by the East of Scotland Investment Fund we see a wide variety of businesses though manufacturing, technology and IT companies and tourism businesses are regular applicants. But we have helped all sorts from breweries to top end food processors to childcare nurseries.”

A snapshot survey of small and medium sized companies by the East of Scotland Investment Fund has shown that despite a more positive view of business performance two-thirds of businesses have not secured bank funding. Some businesses opted not to approach the banks as they did not want to put their houses up for security, but many who did were refused funding for a variety of credit, cost and bank policy reasons.

However, Dickson recognises that some companies are just not ‘investor-ready’ when they approach potential funders. He highlights that the process of application for the East of Scotland Investment Fund usually incorporates steps to ensure that companies put their best case forward.

“There is a mixed response amongst applicants but the majority tend to be investor ready partly because they are experienced businesses and partly because they have taken advice from their Local Authority Loan Officer or Business Gateway.

“Applicants should take advice as even the most experienced can benefit from a fresh perspective. But however good the paperwork is, it is crucial that the business people can really prove that they know their business when we meet them. Relying on a good business plan and application written by someone else won’t work. You need to show that you understand your business, know exactly what you are applying for and why and inspire confidence that you can make the plan work.”

The £5m Fund was boosted last year by an extension from the European Regional Development Fund to support the creation of new jobs and new market opportunities for small to medium sized companies. Loans of up to £50,000 with interest rates currently fixed at 6% and a maximum repayment term of 5 years are available. These can be used towards working capital or the purchase of equipment, plant or business property.

Companies who have already benefited say that the process helps them to focus on their plans and projections and many have been able to expand into new markets and develop new products.

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