A COMPANY that developed a safer engineering process for fracking may be forced to sell its patent overseas after government-backed loans were withdrawn by its bank.

Aberdeen-based Caledyne has already had to sell off one patent, which won the group a national innovation award a year after it was set up in 2004 by managing director Roland Van Dort.

He said: "Government promises a lot of support, but it does not always get to the right people as, ultimately, the banks control the funds. This needs to change to ensure innovation gets captured in Scotland."

Mr Van Dort said he understood why fracking in the UK was arousing controversy. "We have a patent for a different method of doing the fracking, a much safer way of doing it," he said.

"We applied for the patent almost two years ago before the new legislation came out. Our solution is right up there. We have the ideas, solutions, patents - the problem is, we don't always necessarily have the funds to develop it. That's where the government-backed loan came in. We were getting it initially as a fund to help us commercialise our ideas."

In November 2010 Caledyne secured a £1.8 million package from the Clydesdale Bank, which said at the time: "Caledyne is an excellent example of the type of company we are keen to work with. It has groundbreaking technology, a robust management team with strong leadership and ambitious-but-achievable growth plans."

But progress was slowed by a delayed major contract, targets were missed, and the bank withdrew the company's £670,000 overdraft.

It also removed a loan that was 75% backed by the Government under its Enterprise Finance Guarantee scheme, awarded at £775,000, of which £255,000 had been repaid.

Mr Van Dort added: "I did not have a problem with the overdraft, but I could not understand why they insisted on having the EFG loan back as well."

The firm had offered in vain to ring-fence the 25% of the loan already secured against the directors, and to reduce the repayment terms.

Mr Van Dort said Caledyne, currently employing 15 staff and turning over £3.5m, had a lot of opportunities to grow. He added: "The oil industry is different from other industries. With the right deal with the right client you can go from nothing to earning £10m right away."

Ewan Sinclair, a Caledyne director, said targets were missed because on the eve of a sale agreement with a major oil service company it was acquired by a bigger player. "All bets were off. But we are now speaking to the bigger company on a similar basis."

Meantime, Clydesdale had halted the EFG funding and referred Caledyne to its credit team in Edinburgh, which led to the sale of the patent that was Innovation of the Year in the National Business Awards for Scotland 2005.

"It would have been an awful lot more valuable had we been allowed to develop it properly," Mr Sinclair said. "We managed to get over the line, and we thought we would have significant funds left to grow the company, but when the funds came in they said no."

The asset sale helped pay a 2012-13 tax bill, late payment of which had prompted HMRC to lodge a wind-up petition at the Court of Session, which was withdrawn last week.

Mr Sinclair added: "In the market we operate in, with high pressure, very corrosive environments, to successfully design and test and sell these products you need a strong bank that is not going to run away."

The alternative, he said, was an investor from the industry who could see the value of the technology. "Otherwise we have to sell IP to keep ourselves afloat. This is how innovative ideas are getting sold cheap to foreign companies - it shouldn't be like that."

Mr Van Dort said: "Most of the entrepreneurs want to stay independent because that is why they started up in the first place.

"We need to have some government support that allows you to take it at least to the first stage. Whatever funds are available are run and controlled by the bank, and if the bank doesn't like you they have the authority to remove the loan straight away from you."

He said the company had paid around £130,000 a year in interest and bank charges, adding: "The bank is the only enterprise benefitting from EFG, this business is not."

A spokesman for Clydesdale Bank said: "While we cannot comment on individual cases, we are keen to work with well managed businesses and support their growth. Where facilities are withdrawn, or mature and are not renewed, this is a last resort and only comes after many months of trying to work with a business and its management team to find a positive route forward. Unfortunately, this is not always possible."