'Resilience and Recovery Fund' announced in £100m coronavirus package for UK social ventures
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.
UK social investors today announced a new £100m emergency loan package to support charities, social enterprises and small businesses who are struggling as a result of the Covid-19 pandemic.
The new programme – which social investors first flagged two weeks ago – 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 follows an announcement on Wednesday afternoon of £750m in government funding for frontline charities, which comes after a month of lobbying by voluntary sector representatives and MPs.
Membership body NCVO welcomed the government package “as an important first step” but said it “would not be enough to prevent good charities around the country from closing their doors”.
Peter Holbrook, CEO of Social Enterprise UK, echoed this, saying 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.”
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 next week.
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... doing everything we can to adapt... so that no organisation is making payments it can’t afford
Big Society Capital’s chief investment officer, Jeremy Rogers, 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, CEO of the Social Investment Business, which is managing the Resilience and Recovery Loan Fund, said his team realised the need for speed and transparency in how the money would be allocated. “The team at Social Investment Business has worked at great speed and with great collaboration with colleagues at Big Society Capital and with our social investment partners. We will endeavour to manage the Fund in the same spirit of clarity, speed and transparency. 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.”
We will endeavour to manage the Fund in the same spirit of clarity, speed and transparency
Sarah Gordon, CEO of the Impact Investing Institute, said: “The lending programme announced today is targeted at the organisations which are delivering help to the most vulnerable in this country, often in the face of overwhelming financial challenges. We know that the UK’s banks want to support communities through this crisis, and this programme will help them reach those of their customers it is almost impossible for them to help directly.”
Big Society Capital is itself funded by dormant bank accounts released by the Government alongside investments from the four main banks Barclays, HSBC, Lloyds and RBS.
Social Enterprise UK's Holbrook said: “The decision to release dormant accounts money faster into the sector is the right one given the scale of the challenge we face.”
The decision to release dormant accounts money faster... is the right one given the scale of the challenge we face
He added: “Provided that loans are provided in the right way, these can help many social enterprises through the current crisis. I look forward to working with social investors to make sure that the loans are distributed in a form which helps social enterprises to keep running and making a positive impact.”
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