Emergency Loan Fund for Scottish SME Housebuilders

BLOG8th May 2020

The Scottish Government has launched a £100 million Emergency Loan Fund for Scottish SME housebuilders with liquidity issues due to the temporary closure of the housebuilding sector.

The fund’s aim is to safeguard jobs and protect suppliers, ensure a continued supply of homes, support post-COVID-19 economic recovery and retain diversity within the housebuilding sector.

Eligible businesses will:

  • Have a turnover of less than £45 million
  • Build at least five homes per annum
  • Have a viable business pre-COVID-19
  • Be unable to secure funding from existing lenders or own resources
  • Be unable to secure sufficient funding from UK Government or other Scottish Government COVID-19 schemes. 

The fund offers short-term loan funding to applicants to cover three months of liquidity support to their business.

The key terms of the loans are:

  • Loans of between £50,000 up to £1 million will be available
  • Majority of loans expected to be repaid within 24 months
  • Fixed interest rates set at 2%
  • Security on loans will be assessed on a case-by-case basis, which will help improve the risk profile for the Scottish Government

The fund opened on 18 May, 2020, with applicants asked to complete a form and provide financial information to support their application.

The following information is required to be provided in order to access the Emergency Loan Fund:

  • Details of the company structure, ownership and directors
  • A copy of the company’s last audited accounts
  • Information on how COVID-19 has had a direct impact on the business
  • The amount of funding being sought, and what it will be used for
  • Company cashflow, including COVID-19 related costs and repayment profile. Template is provided in the application form.
  • What security can be offered (if any)
  • Details of the company’s existing lenders and securities
  • Bank details (applicants will be asked to provide a copy of a recent bank statement that is less than three months old and shows the account name, sort code and account number) – an authorised signatory, for the company, should sign this as a true copy
  • Details of efforts to secure funding from other private or own business sources
  • Details of attempts to secure funding from the Scottish Government, UK Government or other public sector COVID-19 schemes, alongside evidence of whether these attempts were successful
  • Confirmation that the business was not in difficulty before COVID-19 for state aid compliance

Completed applications should be returned to the fund mailbox at SMELiquidityFund@gov.scot and should be sent from a business email address.

Additional important information on the fund:

  • If an application is successful, it is recommended that appropriate legal advice is pursued.
  • Sub-contractors cannot apply for costs claimed through the application.
  • Financial information should match the spreadsheet cash flow template that the applicant is required to complete as part of the application form and is available to download at the bottom of this page.
  • Details of how the loan will be repaid must be provided and included in the cashflow – it is worthwhile sense checking your cashflow with your accountant.
  • Where available, evidence of funding awards or declines from private and public funding sources should be submitted with your application.
  • Only one application will be accepted per company or group, regardless of the number of branches, subsidiaries or parent bodies.
  • The Scottish Government will undertake a company credit check using a Dunn & Bradstreet report and reserves the right to undertake further credit checks if required.
  • The Scottish Government will assess the application and will decide the appropriate level of funding that can be supported – this level may be lower than your requested amount.
  • The Scottish Government will publish details of awards made by the fund including the organisation name and the level of loan approved. Details of the awards will also be published on the European Commission Competition database.
  • The Scottish Government retains the right to alter scheme rules/criteria from time to time as it considers appropriate.

Further information, including the application form and template cash flow required to submit an application can be found here: https://www.gov.scot/publications/coronavirus-covid-19-liquidity-support-sme-housebuilders/

Should you require any assistance with your application, or discuss whether you may be eligible, please do not hesitate to contact our dedicated COVID-19 support team at covid19support@aab.uk.