East Lothian businesses received £70,000 in council-backed loans in first month of lockdown
Not a single business that received an emergency loan from East Lothian council in the first month of lockdown has defaulted on their payment obligations, a new report has revealed.
In a record described as ‘remarkable’ by an adviser, East Lothian Investments Ltd (ELI) said it had returned more than £70,000 to businesses in the first month of lockdown and nearly two years later had no defaulters.
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The company, which was set up by East Lothian Council and offers interest-free loans to start-ups/businesses based in the county, said it launched a business interruption loan in March 2020 to help businesses facing difficult serious cash flow problems caused by the confinement.
It handed out £70,200 to businesses in loans of up to £5,000 with a six-month repayment holiday and 24 months to repay.
A company report to the board’s audit and governance committee this week found the loans went to retail, hospitality and social enterprises, among others.
Richard Baty, the council’s business director, said at the meeting: “As of January 2022, there are no defaults, a loan holiday is in place and one business has entered into a loan arrangement program. debt that was unrelated to Covid.”
Councilor Stuart Currie said the result was “remarkable”.
He said: “It’s quite remarkable given the current circumstances and I don’t think it was an accident.
“This demonstrates the due diligence of Mr. Baty and the team.
“It’s not about picking winners, it’s about picking good prospects and I think that’s the key for that.
“There’s been so much money that’s been poured out frankly to anyone who says ‘hello, I’m a business’.”
Mr Baty told the committee that since ELI was set up in 2001, it has provided more than £3.2 million in loans to 367 local businesses, creating 878 new jobs and protecting almost 2,000 workers.
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He said that over the past 12 years, the level of bad debts written off was 3.12%.
Asked by committee chair Councilor Jane Henderson if ELI was under pressure to increase, Mr Baty said there was no pressure on lending as there were other schemes now available.
However, he said, the banks had “withdrawn” from lending to street businesses and start-ups.
He said: “We have seen this year in particular that they (banks) are not interested in start-ups
“We heard through the grapevine talking to applicants where the banks said ‘really like your business idea but we’re not touching it’.”