Not a single firm given an emergency loan by East Lothian Council in the first month of lockdown has defaulted on payments, a new report has revealed.
In a record described as 'remarkable' by one councillor, East Lothian Investments Ltd (ELI) said it handed over more than £70,000 to businesses in the first month of lockdown and nearly two years on had no defaulters.
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The firm, which was set up by East Lothian Council and provides interest free loans to start–ups/businesses based in the county, said it launched a Business Interruption Loan in March 2020 to help firms with severe cash flow issues caused by lockdown.
It handed over £70,200 to businesses in loans of up to £5,000 with a six months repayment holiday and 24 months to pay back.
A report from the firm to the council's audit and governance comittee this week revealed that the loans went to businesses in retail, hospitality and social enterprises among others.
Richard Baty, the council's companies manager told the meeting: "As at January 2022 there are no loan defaults, one loan holiday is in place and one business entered into a Debt Arrangement Scheme that was not Covid related."
Councillor Stuart Currie said the outcome was 'remarkable'.
He said: "That is quite remarkable given the current circumstances and I don’t think it is an accident.
“It demonstrates the due diligence taken forward by Mr Baty and the team.
“It is not about picking winners, it is about picking good prospects and I think that is the key to this.
"There has been so much money going out the door to frankly to anyone who says ‘hello I am a business’.”
Mr Baty told the committee that since ELI's creation in 2001 it has awarded more than £3.2million in loans to 367 local businesses creating 878 new jobs and protecting nearly 2,000 workers.
He said in the last 12 years the level of bad debts written off stood at 3.12%.
Asked by committee chairperson Councillor Jane Henderson if ELI was under pressure to scale up Mr Baty said there was not pressure on lending as there were other schemes now available.
However, he said, banks had “withdrawn” from lending to high street businesses and start ups.
He said: “We have seen this year particularly they (banks) are not interested in start-ups
“We have heard through the grapevine talking to applicants where the banks have said ‘really like your business idea but we are not touching it’.”
