South of ScotlandSouth of Scotland Loan SchemeLoan Scheme

History of SoSLS

. Loan Scheme started in 2004

. 88 loans granted in 10 years

. £2.69m invested via SoSLS to date

. Average loan granted is £30,500

Key Features of the SchemeKey Features of the Scheme

• Loans available between £5,000 and £50,000

• Attitude to Risk

• Interest at Base Rate + 1%– Currently 1.5%

• Rate reviewed October and March each year

• Loan term is 5 years

• Early repayment is permitted

• Capital Repayment Holiday of up to 6 Months available

• Loans over £30,000 – Security required for companies

• Location in Borders or Dumfries & Galloway

• S.M.E.’s Only (1-250 Employees)

• Limited Company, Partnership or Sole Trader

• New Start ups or Existing businesses

• Not Available to: Primary AgricultureRetail businessesFinancial & Professional

Services

Who is Eligible

Loan ConditionsLoan Conditions

• Loans available towards both Capital Expenditure and Working Capital projects

• No support available for purchasing property but refurbishing and extending property is eligible

• SOSL support must be match funded by private sector sources

Loan ConditionsLoan Conditions • There has to be a clear funding requirement for support

• Applicant businesses have to show potential to be financially viable

• It is helpful if the project will secure or increase employment

• Potential for growth in Turnover/Productivity/ Improved Products helps case

• Top-up loans up to £50,000 will be considered

The Process

• WRDC Role as scheme contractor

• Application form and financial information

• Business Manager Appraisal Form

• Financial due diligence process

• Final decision made by SEBSED Panel

• Timescale of 2 weeks

• Key background on business

• Profitability, Cash flow, Solvency and Gearing

• The Project and Funding Package

• Conclusions

• Conditions

Financial Due Diligence

After the Loan is Approved

• Loan documentation issued

• Conditions satisfied

• Loan has to be drawn down within 3 months

• Security put in place by SE legal

• SE staff monitor the business

Difficult Areas

• The Application Form is not properly completed

• The correct financial information is not supplied

• The business responds slowly to due diligence questions

• Clarification of security ranking can be problematic

South of ScotlandSouth of Scotland Loan SchemeLoan Scheme