Emergency £100m loan fund for SME housebuilders

Housebuilders will be able to apply for short-term loans of up to £1 million from the Scottish Government to support them through the coronavirus outbreak.

Kevin Stewart MSP

Small and medium-sized enterprises (SMEs) with liquidity issues due to the temporary closure of the housebuilding sector will be able to apply to a £100m Scottish Government emergency loan fund which aims to:

  • safeguard jobs and protect suppliers
  • support post-COVID-19 economic recovery and the continued supply of homes
  • retain diversity of the housebuilding sector.

Housing minister Kevin Stewart 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.

“This 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 plans in place to ensure economic recovery over the months and years ahead.”

Nicola Barclay

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.”

SME housebuilders will be able to apply for loan support from 2pm on May 18 on the Scottish Government website. Full details on the criteria for the Fund will be available at that point.

Applicants should be a SME housebuilder with a turnover of £45m or less per year and building five or more homes per annum. They should only apply for funding that is necessary for the short term. They will be asked to explain why existing support mechanisms are not sufficient for their business.

Loans are capped at £1m, most loans are expected to be repaid within two years with interest rates set at 2%. The minimum loan amount is £50,000.

Meanwhile, a fund launched earlier this month to provide grants for SME businesses affected by coronavirus is to be doubled from £45m to £90m.

The First Minister announced the increase in the Pivotal Enterprise Resilience Fund to help meet existing demand.

The aim of the fund, which is managed by Scottish Enterprise, Highlands and Islands Enterprise, and South of Scotland Enterprise, is to provide grants to SMEs which are vital to Scotland’s local or national economy but have been made vulnerable by this crisis.

While the large volume of received applications are being evaluated, the application process is currently being paused. Payments will still be made to businesses within 10 working days of receiving completed applications and the two hardship funds for the newly self-employed and the creative, tourism and hospitality sectors remain open for applications.

Fiona Hyslop MSP

Cabinet secretary for economy Fiona Hyslop said: “This extra £45m is a direct response to feedback from businesses. It demonstrates our determination to support pivotal businesses which are suffering, through no fault of their own.

“This package of funding will reach businesses in need - at pace - and continues our commitment to ensure every penny of the additional business money that has come to Scotland is passed on to support our economy.”

The funds which make up the £145m support package are as follows:

  • £34m Newly Self-Employed Hardship Fund, managed by local authorities, allocated to the newly self-employed who are ineligible for UK support (as they became self-employed since April 2019) but are facing hardship.
  • £20m Creative, Tourism & Hospitality Enterprises Hardship Fund, managed by the Enterprise Agencies with support from Creative Scotland and VisitScotland for small and micro creative, tourism and hospitality companies not in receipt of business rates relief with grants of up to £25K.
  • £90m Pivotal Enterprise Resilience Fund, managed by the Enterprise Agencies providing bespoke grants and wrap around business support to viable but vulnerable SMEs who are vital to the local or national economic foundations of Scotland

The Scottish Government is also providing £1m to top up Creative Scotland’s Bridging Bursaries in the not-for-profit sector.

Dr Liz Cameron OBE, chief executive of the Scottish Chambers of Commerce, said: “The volume of applications to this Pivotal Enterprise Resilience Fund was high, demonstrating that for many SME’s, working capital and cash in the bank could be the difference from surviving to going under.

“As ever, the speed of decision making and getting the money into our bank accounts is critical.”

  • Read all of our articles relating to COVID-19 here.

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