Improving awareness of funding options for Scottish SMEs

Regional Director Alex Russon discusses what support is available to Scottish SMEs in his article published in NACFB’s Broker Magazine, Q4 2025.

Scotland’s financial landscape is built on trust, ambitions, and a clear drive for growth. Nowhere else in the UK are SMEs more inclined to seek external finance. According to the British Business Bank’s Scotland SME Access to Finance Report, 62% are already tapping into funding.

But ambition alone isn’t enough. Many businesses still find themselves blocked, with 38% facing barriers to access – highlighting both the opportunities and the challenges in one of the UK’s most dynamic funding markets.

So what sets Scotland apart, and where do opportunities lie?

A market built on relationships

In Scotland, deals are rarely won on price alone. Trust and personal connections matter more.

In my experience, brokers in Scotland want to get to know you before they’re prepared to work together. They spend a lot more time developing a relationship with you before they entrust you with their customers.

Gordon Larson, Director of NordCom Finance, commented that this dynamic shapes how the market operates: “The fundamental thing about Scotland is that it’s relational first and foremost, and always will be.”

A fragmented market with unmet needs

Much of the Scottish economy is made up of microbusinesses and family-run firms, creating demand for smaller, more tailored lending solutions. “There is volume to be had, but it’s very fragmented. It’s a lot of lower-value transactions” explains Gordon.

This is reflected in the British Business Bank’s 2025 Small Business Finance Markets Report. Nearly four in ten SMEs (39%) anticipated needing additional finance in the next 12 months, with 60% of those expecting to require £50,000 or less.

The report also found that the primary uses for new financing were for capital expenditure (44%) and working capital (40%), underscoring the importance of day-to-day support.

I agree that this is where lenders must adapt. Scottish businesses aren’t looking for huge facilities. They need flexible funding they can trust, and advisers who understand the scale they operate at.

Barry McCulloch, Senior Manager, UK Network, Scotland at the British Business Bank said: “Scotland is a great place to do business but navigating its size and rurality requires a nuanced approach. Recognising that the needs of a rural business in Galashiels are different to a business based in Glasgow is key”.

Closing the education gap

Beyond structural challenges, a lack of financial education remains a barrier for SMEs. “The SME Access to Finance Report notes that credit cards were the most commonly used finance form among smaller businesses in Scotland” says Barry, “which suggest there is a need to educate on other funding options”.

Gordon says: “Financial education needs to get put out there, even at the school level. The majority of Scottish brokers are dealing with a guy in the driver’s seat of his van, wondering how he’s going to pay his crew on Friday.”

I also see this pattern. Too many SMEs still default to unsuitable solutions simply because they don’t know what else is out there. Brokers and advisers need to be part of the education ecosystem that changes that.

Appetite for growth

Despite these barriers, Scottish SMEs remain ambitious. The British Business Bank report found that 38% expect to grow over the next year, with 33% planning to use financing for research, process improvements, or significant maintenance – a higher proportion than Northern Ireland (24%) and Wales (14%).

This appetite for long-term growth and innovation among Scottish businesses is significant, and as Barry McCulloch from the British Business Bank notes: “With so many SMEs looking to invest in their future, there’s a clear role for brokers and lenders to turn that ambition into achievable growth.”

Building a collaborative ecosystem

Yvonne Balfour, Chief Marketing Officer at Ultimate Finance, believes that, only by working together, can lenders, brokers, introducers, and trade bodies make real progress in Scotland. “That’s definitely where collaboration comes in, and why it’s massively important that these conversations are happening,” she explains.

Part of that collaboration is about attracting and training new talent into commercial finance. As Gavin Mories, Relationship Manager at Ultimate Finance, puts it: “It’s on all of us to collectively do something about it.”

A strong example of the industry moving in the right direction was Gordon’s inaugural Scottish Commercial Finance Expo, which took place in May 2025. By bringing together professionals from across the finance ecosystem, the event showcased solutions, shared insight and created the visibility needed to put debt funding firmly on the agenda.

Looking ahead

Debt lending in Scotland is not just about capital. It’s about giving businesses the confidence to grow and the ecosystem the tools to support them. With demand rising, the industry’s task is simple: work together to turn barriers into opportunities.