THE taxpayer-funded Scottish Investment Bank is to be expanded to offer greater help to small and medium-sized firms seeking finance.

Scottish Enterprise will receive £21.5 million of funding from the Scottish Government in the 2016/17 financial year to assist it in developing its SIB arm to meet the expanded remit, it was announced yesterday.

The Scottish Government noted that the move followed its ‘programme for government’ commitment to create a Business Development Bank to address gaps in the market for finance for small and medium-sized enterprises.

Scottish Enterprise has been asked to prepare a plan for creating the Business Development Bank services within the SIB, and to report back before the end of the Parliamentary session next month.

Deputy First Minister John Swinney said: “I believe the best approach to creating the Scottish Business Development Bank is to enhance the remit of the Scottish Investment Bank and for Scottish Enterprise to offer a wider range of business investment approaches, addressing some of the market-place gaps to improve the supply of funding.

“Additional activity could include providing support to a broader number and range of businesses, offering and enabling loans, and potentially guarantees, alongside equity products, and providing an enhanced financial readiness service.”

He added: “I am pleased that, despite a tough financial settlement, I have been able to use the draft budget to allocate £21.5m of financial transactions funding to Scottish Enterprise in 2016/17 to help in developing the SIB to meet its new objectives.”

Scottish Enterprise chief executive Lena Wilson said: “We will focus on a response which addresses both supply and demand issues relating to increasing the available funding options and helping companies to successfully raise funding.”