Alternative finance company LendingCrowd partnered with the Scottish Investment Bank (SIB) in an initiative that will see £2.75 million ($3.36 million) invested in Scottish SMEs across the LendingCrowd platform.

The move should stimulate loans of up to £35 million ($42.7 million) for SMEs while leveraging significant private sector investment.

The agreement will allow SMEs to access loans of between £5,000 ($6,105) and £250,000 ($305,270) over terms ranging from six months to five years, with applicants applying directly to LendingCrowd.

“Our groundbreaking agreement with Scottish Enterprise, one of the first initiatives of its kind in Europe, will help to fund the next stage of growth for some of Scotland’s most exciting SMEs,” Stuart Lunn, CEO and co-founder of LendingCrowd, said. “This recognizes the increasing importance of peer-to-peer access to finance and, in practical terms, will allow a significant number of small to medium-sized businesses the chance to pursue their ambition to expand and compete in the UK and internationally.”

Kerry Sharp, head of the SIB, said: “We recognize that many Scottish companies continue to struggle to raise the funding they need to grow and evidence points to substantial gaps in the supply and demand for finance within the Scottish market. Under our expanded remit, we are increasing the diversity of finance provision in Scotland and this new initiative with LendingCrowd is the first example of how we are opening up innovative sources of alternative funding to Scottish SMEs.”

LendingCrowd, Scotland’s only headquartered peer-to-peer lender, has facilitated loans totaling over £7 million ($8.5 million) and has over 2000 investors signed up to its platform.

SIB is the investment arm of Scottish economic development agency Scottish Enterprise, operating Scotland-wide in partnership with Highlands and Islands Enterprise.