SME Loan Fund Launched in Scotland

The Scottish Government have launched a new £100 million emergency loan fund for SME housebuilders, to support them during the Coronavirus lockdown.

With all construction work in Scotland currently on hold due to the virus, housebuilders can apply for a short term loan of up to £1 million to help them navigate any liquidity issues which could come from the temporary cessation of the housing market.

The emergency loan fund scheme is designed to:

• Safeguard jobs and protect suppliers
• Support post COVID-19 economic recovery and the continued supply of homes
• Retain diversity of the housebuilding sector.

The new emergency scheme will open today (Monday, May 18^th, 2020) at 14:00, and those who would like to apply can do so via the Scottish Government’s website. However, applicants must meet the following criteria:

• They are an existing business in Scotland which has been directly affected by COVID-19
• Their turnover is less than £45 million and they are building five or more homes per annum
• Their business was financially viable before COVID-19
• Funding cannot be secured from existing lenders or their own resources to meet liquidity needs
• The business has been unable to secure sufficient funding from UK Government or other Scottish Government COVID-19 schemes.

SME housebuilders can only apply for funding that is necessary for the short term, and those who apply will be asked to explain why existing support mechanisms are not sufficient for their business. Loans are available between £50,000 to £1 million, with most of the loans expected to be paid within two years with an interest rate of 2%.

Kevin Stewart, Scotland’s Housing Minister said: “To save lives and protect the NHS during the coronavirus outbreak all non-essential construction work has been halted. This decision was not taken lightly, and I know it is having a profound impact on the housebuilding sector, particularly smaller businesses which are struggling to cope with delayed house sales and the increased costs associated with site shutdowns.

“The new loan fund is open to small and medium-sized housebuilders operating within Scotland. It will provide urgent support to address liquidity pressures facing housebuilders and will help ensure their future.

“I would like to thank everyone in the sector for their support during the coronavirus pandemic, and assure them that the Scottish Government is committed to safeguarding jobs and putting in place to ensure economic recovery over the months and years ahead.”

Homes for Scotland Chief Executive Nicola Barclay said: “This welcome short-term intervention will offer a lifeline for many smaller home builders who play a major role in their local areas in terms of meeting more rural housing need, investment, employment and sustainability.

“Of course, their longer-term survival depends on a safe phased return to work and we continue our close engagement with the Scottish Government on how this can be achieved as soon as possible.”

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