Access to the right funding can make all the difference for a small business in Scotland.
Whether you’re launching a new venture, looking to expand, or managing day-to-day cash flow, a business loan can offer flexible ways to support growth and stability.
Scotland also boasts one of the best funding support systems in the UK. There are several government-backed initiatives, such as the Scottish Growth Scheme, designed to support Scottish businesses and help them grow.
Types of business loans in Scotland
Scottish businesses have access to a range of finance products that can help manage cash flow, fund growth, or invest in new opportunities. Below are the main types of business finance commonly available through Aurora Capital:
- Secured business loans: A secured loan uses a UK property as collateral, helping you access larger loans at competitive rates. It’s often suited for businesses with valuable assets that are looking to fund expansion or consolidate debt.
- Unsecured business loans: An unsecured loan allows you to borrow without providing security, based on your credit score and trading performance. This option is ideal for established businesses that need quick access to funding without tying up assets.
- Asset finance: Asset finance lets you purchase or lease things like equipment, vehicles, or machinery and spread the cost over time. It’s designed to help businesses grow without affecting cash flow.
- Merchant cash advance: With a merchant cash advance, repayments are linked to your card sales, making it a flexible option for Scottish businesses in retail, hospitality, or e-commerce with seasonal or variable revenue.
- Revolving credit facility: A revolving credit facility gives you ongoing access to funds up to an agreed limit. You can draw, repay, and redraw as needed, making it ideal for managing day-to-day expenses or taking advantage of short-term opportunities.
- VAT and tax loans: VAT and tax finance helps you spread the cost of HMRC payments over manageable instalments, improving cash flow and reducing financial strain during busy periods.
- Invoice finance: Invoice finance allows you to release cash tied up in unpaid invoices. It provides fast access to working capital and can be a way of improving liquidity and supporting growth.
Government support for businesses in Scotland
Scottish businesses can access a range of government-backed loans and schemes designed to encourage growth, innovation, and investment.
These initiatives provide valuable support to both new and established companies nationwide.
Scottish Growth Scheme
The Scottish Growth Scheme is a government-backed initiative that provides funding to help Scottish businesses access the finance they need to grow.
It supports both loan and equity investment options, aiming to encourage growth across a wide range of sectors. Here are some key features of the scheme:
- Backed by up to £500 million in funding
- Provides both debt and equity finance for growing Scottish businesses
- Aims to support innovation, job creation, and long-term growth
- Delivered in partnership with Scottish Enterprise and other investment partners
Scottish Loan Scheme
The Scottish Loan Scheme operates as part of the Scottish Growth Scheme, offering loans to businesses based in or relocating to Scotland that have growth potential but may struggle to secure traditional finance.
It’s typically aimed at companies with an established trading history and a clear business plan that demonstrates you can pay back the loan. You will also need to show you’ve tried to get funding from other lenders, or have a justifiable reason why you haven’t.
- Loans typically range from £250,000 to £2 million
- Terms usually last between 1 and 7 years
- Designed for businesses with at least two years of trading history
- Funds can be used for working capital, expansion, or international growth
SME Loan Scheme
The SME Loan Scheme helps small and medium-sized businesses improve energy efficiency and sustainability through low-interest or interest-free funding.
It’s ideal for businesses investing in renewable technology or resource efficiency projects.
- Loans of up to £100,000 are available
- Cashback grants may be offered on eligible improvements up to £30,000
- Supports investment in heating, insulation, lighting, and energy systems
- Open to businesses that have been trading for at least 12 months
- Helps reduce energy costs while supporting net-zero goals
Investment Fund for Scotland
The Investment Fund for Scotland, operated by the British Business Bank, provides a range of commercial finance options to smaller businesses across Scotland, including those in rural, coastal, and urban areas.
- Provides smaller loans of £25,000 to £100,000, debt finance of £100,000 to £2 million, and equity investment up to £5 million
- Supports early-stage and growing companies that may struggle to secure traditional finance
- Encourages innovation, job creation, and regional growth
- Promotes sustainable business practices and supports Scotland’s transition to net zero
Other support available to Scottish businesses
In addition to business loans, the Scottish Government and its partners offer business grants and advisory services.
These options can complement loan finance or help prepare your business to become investment-ready. Grants and support available include:
- SMART: SCOTLAND Grant: This is an R&D feasibility grant for SMEs based in Scotland, supporting early‐stage, high-risk innovation projects.
- Small Capital Grant: A capital-investment grant for small to medium businesses supported by Scottish Enterprise, covering asset purchase, upgrades, and tech investments.
- Find Business Support: This comprehensive Scottish Government portal lists hundreds of grants, loans, advisory services, and training opportunities to help Scottish businesses at all stages.
- Business Gateway: This is a publicly funded support service that delivers free advice, tools, and training for start-ups and growing businesses across Scotland.
How to choose the right business loan in Scotland
Choosing the right business finance can support growth, improve cash flow, and provide stability when you need it most.
Start by understanding what you need the funds for, whether it’s to invest in new equipment, manage cash flow, or expand into new markets. The purpose of the loan can influence your choice of product, for example:
- Secured business loans are ideal for larger, long-term investments.
- Unsecured business loans offer quick access to funding.
- Asset finance is used to buy or lease vehicles, equipment, or machinery.
- Invoice finance releases can help to support working capital.
- Revolving credit facilities are helpful for covering short-term expenses.
- Merchant cash advances can help cover seasonal income fluctuations.
Before applying, think about how much you need to borrow, how quickly you need the funds, and what level of repayment your business can comfortably manage.
By matching your financial goals with the right product, you can secure funding that supports your business today and sets you up for sustainable growth.
