Scotland allocated £1bn to fuel growth as part of HSBC's latest SME fund

HSBC UK has earmarked £1 billion to support local economies, employment opportunities and drive growth across Scotland, as part of its latest lending fund, launched today and worth £15bn, for small and medium-sized enterprises (SMEs).

The lender stated that the multi-billion-pound fund will help businesses to expand abroad and domestically, and that since launching the SME Fund in 2014, it has lent more than £90bn to help catalyse companies. This year’s Scottish total is up from £650 million last year.

It said it found that whilst concerns about the broader market remain, its customers are thinking about growth via investment, acquisitions and capital expenditure, with businesses reporting that they are ready to invest for growth and are confident about the prospects for their own businesses, seeing the biggest areas of opportunity as sustainability (12 per cent) and digitisation (11 per cent).

The bank also cited the Federation of Small Businesses finding that SMEs account for three fifths of the employment and around half of turnover in the UK private sector.

As well as regional allocations, the bank’s fund this year includes ring-fenced funding for businesses trading internationally (£2bn) and the tech sector (£500m).

HSBC, which recently reported first-quarter profits of $4.2bn (£3.3bn), added that the fund is aligned with the Green SME Fund (£500m) for businesses of all sizes to transition and thrive in a low-carbon economy and the new Growth Lending Fund (£250m) for high-growth tech firms to support well-equitised, high-growth, loss-making scale-ups early in their growth journey.

The bank also said that last year, its SME fund enabled an Edinburgh-based blanket and scarf company to extend its premises and hire 40 staff with a seven-figure funding package. The Tartan Blanket Co. was able to buy a 32,000-square-foot warehouse in Newbridge, to meet increased demand from international customers.

Emma and Fergus MacDonald, owners of the Edinburgh-based Tartan Blanket Co, who secured capital from last year’s fund to support expansion. Picture: contributed.

UK Small Business Minister Paul Scully said the new fund puts HSBC on course to have lent more than £100bn to UK small businesses within a decade. “This extra funding builds on the support available through government schemes like Help to Grow and Start Up Loans to help small businesses grow and reach their full potential,” he added.

Pressure

Small Business Commissioner Liz Barclay said: “The challenges facing small businesses are beyond imagination. The problems caused by poor payment practices such as late or delayed payments, and extended payment terms, pile pressure on cashflow.

"Small firms are the lifeblood of the economy, and they must be paid fast and fair, and if they are to have the confidence to invest and build the resilience, they’ll need to weather the storms ahead and they will need the support of funds like this more than ever”.

Peter McIntyre, head of business banking at HSBC UK, said: “SMEs are vital to the UK economy, and our customers have told us they are ready to invest for growth. The £15bn fund will help businesses to expand internationally, as well as here in the UK, supporting key sectors and driving investment across the regions.”

Meanwhile, audit, tax and consulting firm RSM UK urged companies not to cut back on investment, saying they need to commit to enhancing productivity to stimulate the economy post-Covid, after its middle market business index fell to 120.9 in the second quarter of this year from 134.9 in the prior period.