Scotland named UK’s start-up hotspot as more Scots look to ‘change direction’
“December and January is a period when many people have the time and motivation to explore setting up their own business and change direction” – Louise McCoy, British Business Bank
Scotland has emerged as a start‑up hotspot after a surge in loans to early-stage businesses north of the Border.
The British Business Bank’s Start Up Loans programme saw a 15.1 per cent year-on-year jump in loan volumes in Scotland during 2025, making the country one of the most entrepreneurial areas of the UK.
The average loan size in Scotland was also some £1,000 higher than the UK average, suggesting that start-ups and early-stage businesses needing financing north of the Border were potentially bigger, according to the state-backed British Business Bank, which oversees the loans programme.
The latest data showed that 43 per cent of the Start Up Loans provided in Scotland during 2025 went to female founders, versus a national average of 39 per cent, which in turn compares to a finding in 2024 that only 14 per cent of small and medium-sized employers were female-led.
Louise McCoy, managing director, Start Up Loans products, British Business Bank, said: “Despite a mixed picture when it comes to business confidence data, in our Start Up Loans drawdowns data we still see a picture of year-on-year demand holding up in Scotland.
“December and January is a period when many people have the time and motivation to explore setting up their own business and change direction. We have already seen December 2025 delivered a much higher volume of loans than December 2024.
“With demand for small business finance from Start Up Loans ticking up, we look forward to supporting more entrepreneurs in Scotland throughout 2026,” she added.
January is traditionally a time when entrepreneurs look to start up or seek external finance. Start Up Loans found that the period between Christmas and New Year was a time many aspiring business owners decided to find out more about setting up a venture.
The Start-Up Loans Company is a wholly owned subsidiary of British Business Bank. It provides personal loans for business purposes of up to £25,000 per partner or owner in a business and to a maximum of £100,000 for a business.
A network of business support partner organisations supports applicants in all regions and industries throughout the UK.
The Start Up Loans programme is not designed to generate a commercial profit. Capital payments together with the interest are “recycled” to help meet increasing demands for finance.
The demand for Start Up Loans runs counter to some other findings around business sentiment. Last week, it emerged that business confidence in Scotland had slumped to its lowest level in more than three years, amid ongoing uncertainty and waning economic growth.
Sentiment tracked by accountancy body ICAEW’s regular Business Confidence Monitor, for the closing months of 2025, found that confidence north of the Border had decreased for the sixth consecutive quarter to a reading of -12.7, down from -0.5 in the previous quarter.
Figures released last summer as part of the British Business Bank’s annual impact report showed that 1,500 smaller businesses in Scotland received fresh financial support in the 2024/25 financial year.
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