Pioneers Post comment on the support announced: a £25m recovery fund, £29m in emergency loans and £50m more as Big Society Capital pledges to “reprioritise and repurpose” existing and future investments – while charities get a long-awaited promise of funding from government.
*Article below is a summary of an article published by Pioneers Post*
The new fund will be open “within weeks”, according to a statement, with loans incurring no fees or interest for the first 12 months.
The promised £100m comes from Big Society Capital “repurposing” existing investments and rescheduling planned commitments for future years. The government’s Department for Digital, Culture, Media and Sport is also releasing money from previously committed dormant bank accounts. The Impact Investing Institute, Big Society Capital and Social Investment Business are looking for additional investment from banks and other investors.
The new funding followed an announcement of £750m in government funding for frontline charities, which comes after a month of lobbying by voluntary sector representatives and MPs.
Peter Holbrook, CEO of Social Enterprise UK, said the £750m would only “cover at best a small minority” of charities and social enterprises and did “not give social enterprises parity with other parts of the economy which have receive large amounts of support.”
Holbrook added: “We remain concerned that thousands of social enterprises delivering key services in local communities, employing and working with vulnerable people and operating in the most deprived areas will go without support. Many good businesses will close unless the government takes a broader approach. We will be looking through the proposals in detail, but this must be the first in a series of measures to help social enterprises, if the Chancellor is to stay true to his word to do “whatever it takes” to help people and businesses through this crisis.”
Emergency loans
The new measures available within the £100m loan fund announced today include:
- A new Resilience and Recovery Loan Fund to enable social lenders to provide emergency loans to affected social enterprises and charities without requiring personal guarantees and charging no fees or interest for 12 months. Big Society Capital will provide an initial investment of £25m, with loans backed by the government’s existing Coronavirus Business Interruption Loan Scheme and issued through Social Investment Business, working initially with Charity Bank, Social and Sustainable Capital and Big Issue Invest. Co-investment from social investors is being sought to supplement Big Society Capital’s initial investment.
- Smaller, emergency loans (no fee, no interest for 12 months) for small businesses and social enterprises in more deprived areas, delivered by ensuring the Community Investment Enterprise Fund, administered by Social Investment Scotland, can effectively access the CBIL Scheme. £29m of Big Society Capital’s and other investors’ capital will be invested initially, with additional institutional investors being approached to co-invest. The loans will be delivered through the Black Country Reinvestment Society, Business Enterprise Fund, Finance for Enterprise and First Enterprise.
- Up to £50m more from Big Society Capital over the coming months as needed, either through the Resilience and Recovery Loan Fund or other funding vehicles.
The Resilience and Recovery Loan Fund is expected to be open to applications in mid-April, with the first loans completed by early May. Further details on the other measures are expected from 20th April.
Read more about support on offer for Social Enterprises in the East on our Covid-19 essential resources for social enterprises page.