THE £94.2 million Scottish Loan Fund (SLF), which was launched in February 2011 to help companies unable to secure bank borrowings for growth, is poised to reveal within weeks a quadrupling of the number of businesses it is supporting.

The SLF, a flagship economic initiative of the Scottish Government, has so far announced only two loan deals.

However, SLF manager Andrew Craig, of Glasgow-based private equity house Maven Capital Partners, has revealed to The Herald that he hopes to unveil a further six financing deals for Scottish companies by the end of this month.

It is believed three of the six hoped-for deals are due to be announced imminently. An announcement is also expected about an increase in the size of the SLF, a key plank of the Scottish Government's efforts to support growth and export-orientated businesses amid tight credit conditions and at a time when the Conservative-Liberal Democrat Coalition's swingeing UK public spending cuts are weighing heavily on the economy.

The SLF was established by the Scottish Government to plug a funding gap, with traditional bank borrowings viewed as hard or impossible to come by for many firms with growth potential.

The fund was a long time in the planning by the Scottish Government before its high-profile launch in February last year.

Commenting on the fact that the SLF had announced only two deals so far, Mr Craig emphasised that the offer of this type of "mezzanine" finance to small and medium-sized enterprises was a relatively novel approach.

He said: "When you have a new fund, you spend a lot of time educating the market."

However, highlighting his ambition to announce a further half-dozen SLF financing deals for Scottish companies in coming weeks, he added: "We hope to complete six by the end of June from where we are – so two going up to eight hopefully. We have got a strong pipeline."

Asked whether there were any sectors or geographies within the Scottish economy which were likely to figure particularly prominently in the SLF, Mr Craig replied: "There will be a strong representation from Aberdeen and the oil and gas community and the renewable community up there. There will still be a good representation from businesses across the central belt and down across Ayrshire."

He added: "There will ultimately be a slight bias towards the oil and gas space because it is such a vibrant sector at present. It is reasonable to say, on balance, that there are a lot of sectors across the central belt and other areas that are still showing a strong interest in the fund."

Peter Hughes, chief executive of industry body Scottish Engineering, in May last year asked questions of the SLF offering.

Addressing Scottish Engineering's annual dinner, Mr Hughes contemplated whether there were any barriers to firms which might wish to obtain finance from this source, in terms of fees or any need to give up a part of their equity in return for funding.

However, Maven managing partner Bill Nixon emphasised to The Herald that the private equity house, formed in 2009 through a management buy-out from Aberdeen Asset Management, had been tasked with running the SLF on a "commercial" basis.

Mr Craig had said when the SLF was launched in February 2011 that it would be generally more expensive for companies to borrow from it than to take on traditional bank debt.

He noted then that the SLF would provide "mezzanine" debt, and could negotiate a warrant or an option to take a small, probably single-digit-percentage equity stake in a business borrowing money from it.

The SLF has a 10-year life. Mr Craig said in February 2011 that the first five years would be the "initial investment" period – lending the money out to firms. The second half of the 10-year life would be to "harvest" or get the money back.

Loans have been made by the SLF to Aberdeen-based Phuel Oil Tools, which specialises in developing and manufacturing equipment for the oil and gas sector, and Glasgow telecoms group Mono Consultants. The loan to Phuel Oil Tools was for £1m. The size of the loan to Mono Consultants was not disclosed.

The SLF, which has the Scottish Investment Bank unit of state-funded economic development agency Scottish Enterprise as its "lead investor", opened for applications in February 2011 with £55m of public money.

The following month, First Minister Alex Salmond revealed four banks had pledged a total £33.2 million and other private sector investors, who were not identified, were putting up £6m for the SLF. Royal Bank of Scotland, Bank of Scotland owner Lloyds Banking Group, and Spanish-headquartered Santander each put up £9.4m for the SLF. Glasgow-based Clydesdale Bank put up £5m.