Perth & Kinross Council is set to join the new East of Scotland Investment Fund (ESIF) in order to make £4.5m of loan funding available to small and medium-sized companies in the area.

The concept of an ESIF is the result of discussions between east of Scotland councils about setting up a joint loan fund to assist businesses to access finance.

Most councils currently operate some form of loan fund, but joining forces would allow a central fund to attract more funding from a variety of sources.

The proposal for ESIF is to put in place a new £4.5m investment loan fund for the east of Scotland. This will be made of £1.7m from councils, £1.2m for a long-term loan and £1.6m from ERDF. An ERDF funding application has already been submitted an approved.

Perth & Kinross Council would put in £200,000 and these resources will lever in over 100% match-funding from the ERDF and the commercial loan.

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The ESIF would be a company limited by guarantee, with an appointed board of directors consisting or representatives from local authorities. It is proposed that loan applications from local companies would still be processed locally by the Council’s Economic Development team, and then passed onto the Board for approval.

The Perth and Kinross target for the fund in its first year will be to support 12 businesses, create 34 jobs and safeguard another 24 jobs.

A meeting of the Council’s Enterprise and Infrastructure Committee on Wednesday 26 May will be asked to approve the proposal to join the ESIF.

Committee Convener, Councillor John Kellas, said: "We know through talking to local businesses and working with them through these difficult times that access to finance is still a problem.

"This scheme would make a larger loan fund available to small and medium-sized businesses in the area, and would also allow us to attract match funding with our investment. Squeezing the value out of every last pound is very important in times of financial constraint, and so this is an excellent use of money.

"The setting up of an ESIF is great news for local businesses. It will give support to companies that have viable plans but are struggling to access funding. Supporting the local economy through these challenging times is one of the top priorities of the Council, and I look forward to seeing the ESIF up and running."

(GK)