Charities and social enterprises will be able to access more than £100m in loans and investments as they tackle the impact of the coronavirus.
Emergency loans and investment will be available to organisations “within weeks”, with no fees or interest to pay for 12 months, according to the announcement made this morning by a team of social investors.
Big Society Capital (BSC) and the Social Investment Business (SIB) said that the measures are designed to help charities, social enterprises and some small businesses which may not qualify for other government funding schemes, but which are seeing their trading and cash flow disrupted by coronavirus.
Initial funding will come from BSC “repurposing” some existing investments and rescheduling future commitments, as well as from the government “accelerating” the release of funds from dormant bank accounts.
New loans available
A new Resilience and Recovery Loan Fund, managed by SIB, is being started with an initial £25m investment from BSC, and will make loans to affected charities and social enterprises. The loans will not require a personal guarantee.
Smaller emergency loans will be available to social enterprises and small businesses in the most deprived parts of the country by ensuring that the Community Investment Enterprise Fund can effectively access the existing government business loans scheme. This programme will receive an initial £29m investment from BSC.
BSC says that it will invest up to £50m more over the coming months, through the Resilience and Recovery Loan Fund or other funding vehicles.
In the meantime, BSC and SIB will be working with the Impacting Investing Institute to attract further investment from banks and other investors.
Big Society Capital: A response to 'huge challenges'
Jeremy Rogers, chief investment officer at BSC, said: “Charities and social enterprises are facing huge challenges as a result of the pandemic. Many are racing to adapt service delivery and facing an uncertain future. While many require emergency grants, others tell us they need loans and investment to continue to deliver crucial services to those most in need.
“We are, therefore, doing everything we can to adapt our existing funding agreements so that no organisation is making payments it can’t afford, and to find new routes to create a level playing field for social enterprises and charities to access the investment best suited to them at this critical time.”
Nick Temple, the chief executive of SIB, said: “We hope that the Resilience and Recovery Loan Fund can be part of the answer to what organisations need to survive these difficult times; and to help those same organisations thrive again afterwards, when their work will be more crucial than ever.”
Oliver Dowden MP, the secretary for digital, culture, media and sport, said: “Our brilliant charities and social enterprises are already playing a crucial role in our national effort to fight coronavirus and we're determined to support them.
"That's why I'm really pleased to be working with Big Society Capital to further help the sector. This funding will be important in allowing better access to emergency loans for organisations that need them."
The Resilience and Recovery Loan Fund is expected to be open to applications in mid-April, with the first loans completed by the start of May.
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