Social Investment Business: a sprint response to COVID-19 and preparing for the marathon ahead

In our ‘Meet the Impact Manager’ guest blog series, we hear how some fund managers in our portfolio have been responding to COVID-19. This week, Nick Temple, Chief Executive at Social Investment Business, shares how setting up the Resilience & Recovery Loan Fund was both a sprint and marathon with three key lessons learned.


Written by

Nick Temple, Chief Executive, Social Investment Business

In late March, I started to say that COVID-19 and lockdown felt like both a marathon and a sprint; what started as a quick soundbite now seems pretty spot on. A sprint because the urgent financial need for many organisations demanded an emergency response to ensure that they survived and had the time to adjust and adapt. As that response continues via grant rounds, loan funds and government programmes, our attention is now also turning to the longer period of recovery and rebuilding - the marathon bit that looks ahead to the next five and ten years, a future changed hugely by the last few months.

At Social Investment Business (SIB), one of our main activities in the last 3-4 months has been establishing and running the Resilience & Recovery Loan Fund (RRLF). It's an initiative that has elements of both sprint and marathon in its set-up and also in what it's trying to do. We have learned a great deal in the process.

The RRLF came about through a mix of circumstance and opportunity and partnership. The circumstance was that SIB had already been working on getting approved by the British Business Bank as an accredited provider, in order to utilise the Enterprise Finance Guarantee. This meant we were well-placed to complete that accreditation and be able to access the new Coronavirus Business Interruption Loan Scheme (CBILS).

That scheme provided the opportunity to get an 80% government guarantee on the investments, and to have the interest and arrangement fee paid by government in the first year. We were hearing that mainstream banks were either overwhelmed, unresponsive or not fully understanding of charity and social enterprise models - so we wanted to use the scheme to meet the needs of those organisations affected by the pandemic.

To do so required partnership: notably Big Society Capital to provide the £25 million investment for the Fund, and social investment partners to allow us to assess deals at pace and to reach a wide range of organisations. To begin with, this was Big Issue Invest, Charity Bank and Social and Sustainable Capital - and they've since been joined by CAF Venturesome, Resonance, Social Investment Scotland and Wales Council for Voluntary Action. A thanks also to our legal friends at Bates Wells and Weill, amongst others. Without these partner organisations, and many individuals within them, we simply wouldn't have been able to establish the fund in 6 weeks - when it normally takes 6 months.

The pace of a sprint has been at the heart of the fund from the start: not only in how quickly it was set-up, but also in designing it to be as responsive as possible. The capacity and skill of the partners, the simple and standardised documents, and the commitment to a weekly investment committee has meant that a charity or social enterprise applying to the Fund can have it approved, executed and have the money in their account within a month. The team at SIB (some of whom were hired at similar pace) has worked closely with partners to overcome and address any problems that might slow things down.

We've already been able to support almost 20 organisations with over £6 million of loans - and we are committed to publishing that aggregate data openly, so you can keep track of applications, approvals and other details on our live dashboard. Those organisations have ranged from charities bridging gaps in their fundraising to social enterprises delivering mental health services; from those running nurseries to those providing care services.

What have we learned?

  1. Being flexible is right - but makes clarity hard

    We rightly built in regular reviews as there was so much we didn't know when establishing the Fund; for example, when we set it up, charities with less than 50% trading were ineligible (no longer the case), Bounce Back Loans didn't exist, government grants packages hadn't been announced, and the furlough scheme was set to end in June (now tapers off till October). All of this made predicting demand difficult - but also meant that we needed to adjust the Fund as we went: which made clear communications with partners, potential co-investors and potential investees tougher as well.

  2. Guarantees suit our sector

    While grants have been (and will be) the answer for many, most of the social investment provision in our sector is still loans or debt. Where we can make those loans patient and flexible with subsidy in the long term, whether that's blending in grants or guarantees standing behind them, they suit the legal structures and the time horizons of our sector's work: in essence, they suit the marathon ahead.

  3. Partnership improves what we do

    The quote I often hear is 'when you want to go fast, go alone; when you want to go far, go together'; what this experience has taught me is that if you want to go fast and far, go together. We at SIB have made plenty of mistakes in this work, but one thing we got right was being very open with how we are doing things; that has allowed us in turn to be more open to ideas and insight from our partners; and that has made what we've all done better and more effective for the organisations we are here to support.

My hope and determination is that we can hold on to the sense of urgency and collective mission the pandemic gave; because it provided a licence to think more creatively and outside our normal constraints and ways of doing things. If we can combine that shared commitment and openness with a continual focus on what organisations and communities want and need, we can continue to go further and faster together - in the sprint and the marathon ahead.

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