The Scottish Government’s SME Loan Scheme provides support to help you pay for carbon and energy saving upgrades in your business. If you have any questions about the scheme, we have compiled a list of answers to frequently asked questions below.
If you have a question that isn’t answered, please get in touch with our support team here or by calling 0808 808 2268.
Energy Saving Trust’s Services Delivery team manages all applications to the Scottish Government’s SME Loan Scheme.
Energy Saving Trust is authorised and regulated by the Financial Conduct Authority.
To discuss an existing application please contact the Services Delivery team by email at SMEloans@est.org.uk, portal message or by calling 0808 108 9414. They are open 9am – 5pm Monday to Friday and if your query requires a reply, they aim to respond to your query within 3 working days of receipt, but this may take longer during busy times or due to the nature and complexity of your query.
The scheme is aimed at providing loan funding for Scottish businesses that fall within the European Commission definition of Small and Medium-sized Enterprise (SME), not-for-profit organisations and charities.
To be eligible, your business must:
These eligibility rules are strictly enforced and cannot be appealed.
Private sector landlords are not eligible for the SME Loan Scheme. If you are a private sector landlord, please contact Home Energy Scotland team on 0808 808 2282 for information on schemes available for the private rented sector.
To apply for funding from the SME Loan Scheme, you need a report from Business Energy Scotland that recommends the energy efficient systems, equipment and/or building fabric improvements that you would like to use the funding to install.
Business Energy Scotland’s reports are free and impartial. You can find out more and request support here.
If you already have a suitable report from Business Energy Scotland. Please get in touch using our online form, or call us 0808 808 2268, and we will provide you with everything you need to make an application.
For the measure(s) that you are applying for, please ensure the following conditions are met:
For renewable measures, please ensure the additional conditions are met:
In cases where an installer wishes to become MCS accredited, with your permission they may use the example of your installation to evidence their application for certification with MCS. Applicants allowing their installer to use the example of their installation to evidence MCS certification are eligible to apply for the SME Loan if the following evidence is also provided:
Yes. Quotes must be provided in the right format – here is an example that shows everything required.
What resource saving project do you have in mind? A wide range of measures are eligible for the SME Loan.
If the measure you are considering is not listed below, please get in touch with Business Energy Scotland as other bespoke measures, technologies and improvements can be considered on a case-by-case basis by the Scottish Government. The Scottish Government approval needs to be sought prior to submitting the application and your Business Energy Scotland advisor can support you with this request.
Heating, ventilation and air conditioning:
Building fabric:
Other equipment:
Measures that result in no financial savings or no carbon savings, or result in carbon increases, are ineligible for funding.
If the technology you wish to install has a payback of more than 20 years, it will not be eligible for funding. Similarly, if the payback period appears as a negative number, then the proposed measure would result in a cost increase when compared to the current measure and so it would be ineligible for funding.
If an organisation applies for a package of linked measures which have a payback of less than 20 years (but where a measure(s) has a payback > 20 years) then it will be eligible. For example, an organisation could apply for funding to install insulation with a 25-year payback and a new heating system with a 6-year payback, where the combined investment has a payback of less than 20 years.
Linked measures with a combined payback period of less than 20 years will receive the full amount of funding for all measures. Linked measures should be dependent on each other, for example heating and insulation or lighting and lighting controls. Oil and LPG heating systems are ineligible for funding. The Scottish Government has ambitious climate change targets and wants to reduce carbon emissions from Scottish businesses. Oil and LPG boilers produce more carbon emissions than alternative heating systems, so the Scottish Government grants and interest free loans can no longer be used for those heating systems.
In addition, applications from businesses looking to sell heat or energy to third parties – other businesses or domestic properties – would not be eligible for funding. The SME Loan was not set up to cover this type of activity and as such the administrator has no mechanisms in place to confirm that the proposed energy supplier is suitably trained or experienced to ensure a secure and reasonably priced service. Applicants with these type of projects in mind should consider the current District Heating Loan available from Energy Saving Trust.
The Scottish Government’s SME Loan Scheme is not accepting new applications for solar PV projects.
All loans are interest-free. The repayment term for all loans is 8 years.
Applicants are actively encouraged to identify all finance options available to them including match funding/co-funding opportunities with the SME Loan Scheme. The SME Loan Scheme however, cannot be used to pay off another loan or finance agreement.
Applicants can apply for both the SME Loan Scheme and the Smart Export Guarantee (SEG). Any loans for measures which are benefiting from the SEG will not attract interest.
SEG is an obligation set by the government for licensed energy suppliers to offer a tariff and make payment to small-scale low-carbon generators for electricity exported to the National Grid, providing certain criteria are met.
Only the forgone interest of a loan is considered as aid.
For example, for an interest-free loan of £10,000 paid back over 8 years the aid would be £2,153.52 in forgone interest (based on a compound interest rate of 5%). Further information on aid can be found on the Scottish Government website.
*The previously known De Minimis State Aid regulations are now replaced with the provisions in Article 3.2(4) of Chapter 3 of Title XI of the EU-UK Trade and Cooperation Agreement (the “TCA”).
Applications are processed on a rolling basis all year round, subject to the overall availability of loan funds. The fund administrators reserve the right, in consultation with the Scottish Government, to suspend or reject preliminary assessments of applications on the basis that there are insufficient funds available in any financial year to provide loans to all applicants.
Once the application is submitted to the fund administrators, providing they have all the information and supporting documents they require, and the loan is signed by an authorised signatory, they aim to make a decision within 10 working days.
If any additional information is required, the application process will take longer than 10 working days to process
The person submitting the application and signing loan documents must be authorised by the business to enter into a loan agreement on behalf of the business.
If you are a sole trader or partnership, the sole trader or one of the partners in the partnership must submit the application form (as a credit check will automatically be carried out on this individual) and later sign all future documents and complete identity verification checks.
Third party authorisation can be given to someone only to manage the application process.
If you are a limited company the application form should be submitted by a director or officer of the business who is listed on Companies House. All future documents and identity verification checks will need to be completed by the same person.
If the person submitting the application form is not listed on Companies House, a letter of authority will need to be provided to confirming a third party authorisation was given to someone only to manage the application process.
If you are a charity, not for profit or other organisation type, the application form must be submitted by someone who is usually responsible for the organisation in legal matters, for example a Trustee, a Treasurer or a President.
Energy Saving Trust administers the scheme and are responsible for processing and assessing loan applications including undertaking the credit check. Applicants will deal with Energy Saving Trust for the loan assessment, offer and payment.
The SME Loan is financed by the Scottish Government with public funds and is unsecured. It is therefore essential that the fund administrator, Energy Saving Trust, is lending money to organisations that are in a robust financial position and able to support ongoing loan repayments.
Energy Saving Trust is also authorised and regulated by the Financial Conduct Authority and as such, have a duty to lend responsibly. A credit check gives an indication of an organisation or individual’s financial position and their credit history, allowing us to gauge the level of risk that would be incurred as a lender. They will therefore also carry out affordability checks in certain situations to assess the impact of repayments.
There are several credit reference agencies that can be used to check your business’ credit rating. If your business is set up as a sole trader or partnership, then the credit check will be done on an individual, so it is important you are aware of your personal credit rating.
If you have concerns regarding the credit assessment, we are happy to discuss this further and, if possible, undertake a credit review at an earlier point than we may normally do.
If an initial credit check is unsuccessful then we will look to offer a route of appeal and allow for additional information to be submitted, such as company accounts.
The agreed loan amount will be released after the measure/s have been installed, invoiced for and, if required, a site inspection by a qualified advisor has been undertaken. A claim must be submitted via the Funding Portal.
Up to 25% of the offered funding amount can be requested as a loan drawdown/upfront payment. To access this upfront payment the supplier quote, or partial/deposit invoice must contain the request for an early payment. The (up to 25%) drawdown payment is not processed automatically when the loan is offered, but can be requested in the next stage of the process – the claim stage. Grant type of funding cannot be claimed as a drawdown/upfront payment.
If you have an outstanding application and wish to contact a member of the loans team on matters relating to the application email SMELoans@est.org.uk or call 0808 108 9414.
For new applications please contact Business Energy Scotland on 0808 808 2268.
If you are contacted about the loan by a third party and have concerns about their authenticity, please call Business Energy Scotland on 0808 808 2268 and our team will be able to advise you.
Cashback is awarded based on the total value of eligible measures applied for within your loan application.
The cashback grant funding can be awarded as per below:
Funding is allocated on a first come, first served basis and subject to availability.
An organisation can make multiple applications but up to the total cashback value of £30,000.
The maximum cashback value for an organisation is £20,000 for energy efficiency measure(s) and £10,000 for renewable technologies. If your previous application was for e.g. £2,000 cashback you may apply again for the remaining £18,000 for further energy efficiency measure(s). Additionally, you can now receive 75% up to £10,000 for certain renewable technologies
No, the grant element can only be accessed when you receive an SME Loan.
The cashback element will be paid to you (along with the loan) after the measure(s) have been installed, invoiced for and if applicable, evidence has been provided/a site inspection by a qualified advisor has been undertaken. A claim will need to be submitted via the Funding Portal.
Yes, providing you have not commenced your installation, paid for any works or materials before the loan offer, cashback will be paid to you (along with the loan) after the measure(s) have been installed, invoiced for and if applicable, evidence has been provided/a site inspection by a qualified advisor has been undertaken. A claim will need to be submitted via the Funding Portal.
Yes, assuming all other eligibility criteria are met, your organisation would be able to apply for a second loan up to a maximum funding amount of £130,000 across all loans/grants applications.
No, cashback is not available where other Scottish Government grant funding is being accessed.
Yes, the cashback counts towards your Special Drawing Rights. For example, a £10,000 loan could attract cashback of £7,500 which would count toward your allocation in addition to the interest foregone.
Yes, certain renewable technologies are not eligible for the cashback offer. These are wind turbines, micro-hydro systems, biomass room heaters (with radiators), combined heat and power with biomass, anaerobic digestion gas condensing boiler, gas boiler-burner management, and gas boiler-burner replacement. The renewable technologies eligible for SME loan funding are listed in ‘What measures are eligible?’ above.
Acceptance of cashback offer disqualifies customers from also applying for and receiving the Renewable Heat Incentive (RHI) on renewable heat measures as only one funding can be accessed per renewable heat installation. Customers are however able to forgo this cashback offer in favour of applying for the RHI funding – by indicating this on their future application form – depending on which initiative suits best the customer business’ needs.
Cashback funding will not be available to organisations: