ScotPac to launch property-secured home and business loans for SMEs

SME lender ScotPac is expanding its range of finance products, offering home and business loans in what could be a game changer for many small business owners who struggle to access finance.

The home loan for business owners will allow borrowers to use equity in their home to help buy or refinance a residential property. Business owners can receive up to $2 million for single properties and up to $4 million for multiple properties, with terms varying from five to 30 years.

Jon Sutton, chief executive of ScotPac, tells SmartCompany the products aim to fill a significant gap in the lending market, as many small businesses find accessing finance challenging.

“SME owners often struggle to obtain finance for their home and for their business, and we also recognise that SME borrowers often use the equity in their homes to finance their businesses,” Sutton says.

On top of home loans, ScotPac’s suite of new products includes a property-secured business loan that will allow SMEs to draw on the equity in their property to help grow their business or refinance an existing loan.

The business cash on call, designed to compete with the traditional bank overdraft, will offer small businesses flexible funding as a property-secured working capital solution.

The aim of cash on call is to give businesses fast access to capital, supporting cash flow and covering unplanned expenses. This funding will be principal and interest or interest-only up to five years.

Sutton says the loans are currently being trialled across a select range of brokers before launching nationally next year.

ScotPac is using the trial to iron out the details of the three new products, including the interest rates, which are likely to be confirmed in the new year.

“We think this is a great initiative,” Sutton says. “It’s something we’ve been planning for a while and with 30 years of experience in lending to business owners, we feel this was a natural product for us to move into,” he adds.

ScotPac plans to offer the home and business loans with the cash on call to business owners in a range of different bundled options. The packages will also feature ScotPac’s existing products, such as invoice, trade and asset financing.

The trial of the new loans comes after ScotPac announced its SME Bounce Back Fund earlier this month.

The $100 million fund will offer up to 2000 new and existing customers debtor or trade finance facilities of between $50,000 and $1 million, for a minimum of 12 months, with no interest to be paid on the loan amount for the first three months.