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Loans vs Grants

With public finances under pressure, there is a clear trend for the public sector to provide more support through loans rather than grants. Such loans would be long-term (say 5 to 10 years) for projects/investments which would be too risky for banks. Nonetheless, there should be a good probability that the loan would be repayed, so a sound business plan, proven management team etc. would be required. State aid would require interest rates to be at commercial levels. You may have seen Innovate UK recently pioneer such a scheme.

Grants would likely remain for higher risk R&D.

Could such finance be useful in the emerging area of quantum technologies and how might it be used?

I agree that it is likely that loans will be the predominant form of public sector intervention for the foreseeable future. This isn't necessarily a bad thing, since grants have often been dealt with in a different way from loans, by both applicant businesses and awarding bodies! I have spent too long watching companies turning themselves inside out trying to meet eligibility criteria for grant funding, on the basis that it's perceived as "free" money, rather than investing time and effort more effectively in working through how additional cash could be best used and subsequently seeking investment or loan funding.

The key for applying for either form of support, as Mark states, is of course a well put together case in a Business Plan and Scotland has a well established support network to help companies prepare loan applications. Business Gateway and Scottish Enterprise are available to help in most cases.

Government can of course vary the terms of loan funding, when certain aspects of policy require to be encouraged and for example the Digital Development Loan in Scotland currently carries no interest and requires no security on appropriate loans between £5k and £50k. Check this out on 


Ronnie Smith, LESL

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