The Scottish Government has said no public money was used to help launch a sex club in Dundee.
Club Kudos on Princes Street opened in May this year and owner John Gibson was quoted saying he had obtained a £15,000 Scottish Government loan to set up the business.
The club is based on the site of a former sauna for gay men and Mr Gibson obtained funding from an organisation called DSL Business Finance Ltd.
It administers the Scottish Microfinance Fund, which is supported by the Scottish Government through the Start-up Loans Company and the European Regional Development Fund.
Firms can apply for loans of up to £25,000. They are not charged administration fees or penalties if they pay off the loan early.
The Scottish Government launched an investigation to see if public funds had been used to open the club.
However, it has now received assurances from DSL Business Finance Ltd about how the loan was agreed.
A Scottish Government spokesperson said: “The loan to Club Kudos has been resourced from the contractor’s own loan funding, not from Scottish Government funds.”
Club Kudos is primarily aimed at single men, although Mr Gibson said couples and women are also welcome.
It describes itself as an “alternative lifestyle club for the gay, bi and swinger community” and has an annual membership fee.
Mr Gibson said the club also promotes sexual health and acts as a “safe venue” for men.
The club has links to the Terence Higgins Trust and has already become involved in sex education for adults.
Mr Gibson was not available for comment on Wednesday.
