Two Scottish decarbonisation funds open to SMEs and community organisations

Two Scottish Government-backed schemes are open for building decarbonisation works. SMEs can claim cashback of up to £30,000 through the SME Loan Scheme, and community buildings can get grants of up to £80,000 through the CARES Community Buildings Fund.

Neither scheme has a fixed closing date, but both are on a ‘first come, first served’ basis, and close once the money is allocated. Between them, they cover heat pumps, insulation and on-site renewables for Scottish businesses, charities and community groups. However, the rules on who can apply and what is funded differ significantly.

The SME Loan Scheme

The scheme is delivered by Business Energy Scotland. It offers an unsecured, interest-free loan of up to £100,000, repaid over eight years, plus cashback once the works are complete. The cashback is broken down into two categories:

• 75 per cent of eligible costs, up to £20,000, for energy efficiency measures such as insulation, glazing, LED lighting and HVAC upgrades
• 75 per cent of eligible costs, up to £10,000, for heat pumps, biomass boilers and solar thermal.

The £30,000 is a lifetime ceiling per business, counted across all applications. Businesses, charities and not-for-profits can apply if they have traded for at least 12 months and meet the SME definition. The scheme is not taking new applications for solar PV, and cashback does not cover battery storage.

The CARES Community Buildings Fund

Local Energy Scotland runs this fund for the Scottish Government and The National Lottery Community Fund. It pays up to 80 per cent of eligible costs, capped at £80,000, and the applicant funds the rest. Every project needs at least one core measure: a heat pump, a heat network connection, solar PV or solar water heating. Insulation, energy storage and controls can be added during the project.

Eligibility is narrower than the SME scheme. Only non-profit distributing organisations can apply, such as SCIOs, CICs and community benefit societies, and they must own the building, or have at least five years left on the lease once the work is finished. Public buildings qualify only after a Community Asset Transfer.

Why timing matters

The schemes can only provide funding to new projects. The SME loan needs a Business Energy Scotland report first, which can take up to eight weeks. CARES needs an expression of interest, an eligibility check, three quotes and a year of energy bills. For most projects, CARES work must be finished and claimed by 15 March 2027, which leaves little room for slow decisions.

The two schemes complement each other; CARES excludes LED lighting and refers applicants to the SME loan for it, whilst funding solar PV, which the SME loan has paused.

What to watch

Both schemes depend on how long the money lasts. The Scottish Government raised CARES funding to £15 million in August, so community energy looks set to remain a priority in the next budget round.

Preparing your applications for these funds is key to a smooth and successful project delivery.

If you would like to discuss decarbonisation, energy efficiency upgrades or any of our service lines, complete the form below and a member of the BTG Eddisons team will be in touch.