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Wednesday, 21 April 2010 |
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Sandra White MSP for Glasgow has today welcomed the announcement of the First Minister Alex Salmond that an extra £50 million will be made to the Scottish Investment Bank to help Scottish business grow.
The extra investment will help businesses which need investment to expand further, investment which has been drastically reduced by commercial banks as the seek to reduce their exposure to the loans market.
The additional measures have been broadly supported by the Trade Unions and business leaders alike who have also been critical of the lack of funding for small business coming form the major banks.
Commenting after today's announcement Ms White said: "I hope that this extra funding will go some way to sustaining Scotland's economic recovery; however I would urge the banks to step up their efforts to support Scotland's businesses. By sending out this clear message that the Scottish Government has every confidence in Scotland's small businesses I hope that the banks will follow suit and demonstrate that they too have regained confidence in this sector.
"Today we also saw encouraging signs that Scotland was emerging from recession but we must remain vigilant and offer every support we can to those businesses who need our help to ensure that they can grow and in turn provide more jobs here in Scotland."
Notes: 1. The Scottish Investment Bank Limited has been established by Scottish Enterprise as a subsidiary company. The SIB will be responsible for the new Loan Fund and the agency's existing 3 mainly equity-based funds: Scottish Seed Fund, Scottish Venture Fund and Scottish Co-investment Fund.
2. The Scottish Investment Bank loan fund comprises £20m in ERDF resources matched with £20m from Scottish Enterprise and a £10m allocation from Scottish Government spring budget revisions that was announced in February.
3. The loan funding aims to provide, by the end of the year, mezzanine-type loan products, targeted mainly at the needs of growth and exporting businesses that are not being met by banks or other private sector sources. It will complement existing public sector finance sources such as the long-established West of Scotland Loan Fund and #5m East of Scotland Investment Fund, announced last month, to support local business growth and job creation.
4. Mezzanine-type finance products lie between relatively safe, secured senior bank debt and relatively riskier external equity and are aimed at viable firms with strong business plans. Many banks offered this type of product until recently, but have now withdrawn them as they seek to reduce their risk exposure. Mezzanine finance generally involves a higher borrowing cost than bank loans, comprising regular interest payments together with an additional lump sum payment (cash or equity) at the end of the loan term.
5. Ensuring improved access to finance to support investment for growth is a crucial element of the Scottish Government's Economic Recovery Plan. Work is underway across the public sector to deliver that plan, accelerate recovery and improve the long term performance of Scotland's economy.
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