Scottish government seeking microfinance fund manager as part of access to finance push

Tender follows creation of new SME Holding Fund Manager

The Scottish Government is seeking a microfinance manager as part of a wider push to increase access to finance for small and medium enterprises (SMEs) via a new £40m (€54.6m) fund set up using European Union funding.

The government set up the SME Holding Fund Manager late last year using European Structural Funds, set up to provide EU member states with financial assistance for “smart, sustainable and inclusive growth”.

The idea is to increase the levels of loan, equity and microcredit being offered to Scottish SMEs. The new fund will provide microcredit finance up to £25,000, loans up to £100,000, and equity investment up to £2m.

The aim is for the fund to support public and private sector partners to put at least £100m into the SMEs finance market over the next three years.

Now, via a procurement notice, the government has released a pre-qualification questionnaire seeking to select up to six organisations to become fund managers, with at least one fund manager for microfinance, at least one for debt, and at least one for early stage equity.

The responses to this questionnaire will be used to select 12 potential suppliers to go forward to theInvitation to Tender stage of a two-stage process. The contract will help to support the Glasgow government’s access to finance strategy and address “market failures” in the provision of finance to SMEs with growth and export potential

It’s hoped the initiative will leverage £4 per £1 grant from the SME Holding Fund and achieve the fund’s target of at least 1,950 jobs in the third to fifth year following investments.

In August last year the government issued a report in which it identified a gap of up to £750m between the supply of and demand for finance. Meanwhile, a proposal to set up a Scottish Business Development Bank is currently in the works as well.

And the Scottish Investment Bank (SIB) is also active in the SME funding market. It runs a variety of funds: the Scottish Co-investment Fund; the Scottish Venture Fund; and the Renewable Energy Investment Fund (REIF).

The deadline for the receipt of tenders or requests to participate is February 4 and a ‘Meet the Government’ event to discuss the tender is being held on January 15 in Glasgow. Link