More than £4billion of government-backed loans were provided to Scottish businesses during the coronavirus crisis, according to new figures from the Federation of Small Businesses (FSB).
By comparison, the latest official statistics show that around £1.3bn of Covid grant support was delivered to businesses by the Scottish Government through councils.
The debt figures show that the proportion of overall loans in each of Scotland’s local authorities matches closely their respective share of Scotland’s population.
FSB says that this shows that businesses across the country have been hit hard by the crisis.
Figures highlight impact on businesses
Businesses in Aberdeenshire borrowed £186m through the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS). Firms in Aberdeen borrowed £165m through the initiatives.
Enterprises in Dundee and Perth and Kinross were offered £108m and £144m worth of loans.
Businesses in more rural areas of Scotland were also forced to seek out government-backed loans. Firms in the Highlands took out £205m, Shetland £18m, Orkney £17m and Na h-Eileann Siar £16.7m.
Other indebted areas included Angus £64.7m, Fife £208m and Falkirk £87.5m.
Around one in four Scottish businesses are likely to have taken on government-backed debt, as 99,792 loans were offered to firms and there are 356,550 businesses north of the border.
The small business campaign group says that the figures show that it will take time for businesses to pay down this debt.
Recovery plan needed
FSB urged the UK and Scottish Government to set out plans for business recovery this Autumn.
Andrew McRae, FSB’s Scotland policy chair, said: “Covid debt casts a long a shadow over Scotland’s small business community.
“If businesses are going to pay down their loans while growing the economy, they’ll need governments in Edinburgh and London to ensure the wider trading environment gives them the best chance to succeed.
“This Autumn, policymakers must avoid heaping new pressures on small businesses. That means doing what they can to keep a lid on overheads while avoiding tax surprises for smaller firms and the self-employed.”
Flexibility needed to support firms
The British Business Bank said Scotland’s share of lending broadly matches its proportion of the UK business base.
In February, the UK Government announced the Pay As You Grow initiative which grants participants extra flexibility when repaying Bounce Back Loans.
Mr McRae continued: “These figures show that firms across the length and breadth of Scotland had to use these support mechanisms to stay afloat.
“Many firms that took out government-backed loans were not regular bank borrowers. Therefore, the banks need to offer these as much flexibility and support as possible in the recovery phase.
“While feedback so far suggests the banks are rising to the occasion, we’d urge businesses that are under pressure to contact their lender as early as possible. We’d also suggest checking out the Pay As You Grow Scheme.”