Report finds long-term funding shortage strangling Scotland’s medium-sized businesses

BDOScotland’s medium-sized firms are being stopped from achieving their potential by a lack of affordable long-term funding, according to a new report from the CBI and accountants BDO.

The research revealed that medium-sized businesses make up only 1.9 per cent of the stock of companies in Scotland but generate 16 per cent of private sector revenue and account for 21.5 per cent of total employment.

It also found 70 per cent of mid-sized firms, defined by the CBI as those with turnover of between £10 million and £100m, plan to grow in the coming year.

But while such ambitions were held, many companies are fighting the effects of a lack of confidence in lenders to back firms over the long term, with more than half finding it hard to access a loan for longer than five years.

The employers organisation said building up a German-style “Mittelstand” of successful medium-sized businesses is mission critical to the country’s economic future.

This will require the government to fix the funding ladder.

Martin Gill
Martin Gill

Martin Gill, head of BDO in Scotland, said the mid-market is fundamental to creating a sust ainable economy.

He suggested the government could tackle the problem simply by adapting existing funding channels.

For example it could offer tax breaks to investors willing to provide debt for at least five years, similar to the way the Venture Capital Trust scheme encourages investors to provide equity funding.

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