Scottish Enterprise plans debt fund

The Scottish government branch is searching for a manager to oversee a planned fund offering.

Scottish Enterprise, a public branch of the Scottish government, is planning to establish a debt fund focusing on lending to small- and mid-sized businesses. The fund is being established following a study from the government body identifying a lending gap in the Scottish SME market.

According to a tender document issued by Scottish Enterprise, “The Scottish Government published a report in August 2015 entitled ‘The Market for SME Finance in Scotland’ which estimates that a Scottish lending gap exists in the range of 330,000,000 GBP to 750,000,000 GBP, with loans up to 1,000,000 GBP being considered the most challenging to obtain.”

The established fund will focus on SMEs. The government entity is searching for a single fund manager to oversee the proposed offering, according to the tender document. 

A spokeswoman for Scottish Enterprise told PDI the fund was slated to launch in March. Since a fund manager for the offering has not yet been identified, the launch date has been put back. 

This is far from the first example of government entities seeking to set up debt-focused funds to aid small- and mid-sized businesses. The British Business Bank, for example, invested £40 million earlier this year with peer-to-peer lender Funding Circle. The move was part of its plan to provide capital to British SMEs.

South Korea’s state-owned Korean Development Bank, was also recently reported to be starting its own fund. The offering is designed to provide mezzanine financing to the country’s technology-focused businesses.

A spokeswoman from Scottish Enterprise did not respond to calls seeking additional comment beyond the tender document by time of publication.