Big Society Capital along with eight other leading social investors[3] are calling on Government to provide an extra six weeks up to 4 November for struggling charities and social enterprises to submit applications to the vital CBIL Scheme.
- Big Society Capital, Social Investment Business and Access – The Foundation for Social Investment seek extension to Coronavirus Business Interruption Loan Scheme (CBILS) for charities and social enterprises as deadline for applications ends 30 September
- Proposal is for CBILS to continue up to early November to allow more time for applications in line with Bounce Back Loans
- Unlike commercial business, the third sector faces unique challenges during the pandemic of surging demand and falling income: 9 in 10 charities expect their income to fall, and the anticipated income hit sits alongside a sharp increase in demand for their services (7 in 10 expect demand to rise)[1].
- Call comes as one in ten UK charities are expecting to cease operating by December[1] and a quarter of social enterprises only have cash flow to allow operations for three months or less[2].
The current deadline for applications is 30 September. Big Society Capital understands from conversations between social lenders and borrowers in their pipeline that many charities and social enterprises have delayed their applications as they apply to grant programmes first, such as the National Lottery Community Fund. Given their size, most have no capacity to undertake more than one application at a time and many charities will only find out the outcome of their grant application – and therefore will not know their funding status – until September, by which time it will be too late to apply for CBILS.
Many charities have sought additional funding, with half (50 per cent) saying they’ve applied for emergency support from non-government sources and more than one-in-three (37 per cent) applying for a share of the £900 million of support earmarked for the sector by the government. But Pro Bono Economics points out that such sources are not available to all, noting that one-in-ten (12 per cent) of charities say they “expect” to cease operating altogether before the start of December[2].
Big Society Capital provided the initial £25 million in funds for the Resilience and Recovery Loan Fund (RRLF)[4] which is managed by Social Investment Business (SIB). Loans are backed by CBILS and issued through SIB working with partners (Big Issue Invest, CAF Venturesome, Charity Bank, Resonance, Social Investment Scotland, Social and Sustainable Capital and Wales Council for Voluntary Action) to make the Scheme more easily accessible to charities and social enterprises. RRLF can issue loans ranging from £100,000 to £1.5 million. To date, RRLF has approved funding of c.£10 million to 28 charities and social enterprises.
The types of organisations that have benefited are already proving themselves to be indispensable in the recovery to the pandemic, from a social enterprise providing employment opportunities to those at risk of homelessness, to a charity supporting the most vulnerable in its community through foodbanks, visits to the elderly, and mental health support to NHS workers.
Stephen Muers, Interim CEO of Big Society Capital, said:
“The uncertainty in the economy and amongst communities that gave rise to CBILS still remains. It’s a double hit for charities and social enterprises. Uniquely, they face not just dramatic falls in income but because of the pandemic they have also seen surges in demand for their services. Research among social enterprises has shown that a quarter have cash flow to allow operations for three months or less, with one in ten UK charities expecting to cease operating by December. These are dire times for social enterprises.
“We are asking Government to extend the deadline for applications by just over a month so the third sector can benefit. For many, Covid-19 is an existential threat and CBILS would provide a much-needed lifeline.
“We also need to look at providing a longer-term, dedicated guarantee, as our recent experience with CBILS has demonstrated the value this could create for the social sector and the public. We call on Government to explore this option with us.”
The parents of a child using the services of the Royal Society for Blind Children, one of the charities to take advantage of the loans offered by RRLF, added their voice to highlight the importance of the vital services that so many charities provide:
“Just having regular contact with our Family Practitioner has made a real difference, having someone to talk to who understands what you’re going through. Stan has loved the weekly sensory stories and our FP is so lovely.”
Notes to Editor
For an interview with Stephen Muers, please contact the media team below.
Case studies of charities that have received loans from RRLF are also available.
Media contacts:
Please contact: Bigsocietycapital@newgatecomms.com
Andrew Adie – 07970 256512
Guy Smith – 07850 771900
Gareth Jones – 07920 015070
Background:
[1] Headline findings from Pro Bono Economics charity tracker survey covering 261 civil society organisations across the UK. The findings were released in June 2020.
[2] Headline findings from SEUK’s Social Enterprise Advisory Panel survey among 264 social enterprises in the UK. Survey ran over July and August 2020
[3] Social Investment Business, Access – The Foundation for Social Investment, Big Issue Invest, Charity Bank, Resonance, Social Investment Scotland, Social and Sustainable Capital and Wales Council for Voluntary Action
[4] Resilience and Recovery Loan Fund (RRLF) provides loans for social enterprises and charities that are experiencing disruption as a result of COVID-19
RRLF is managed by Social Investment Business alongside fund partners Big Issue Invest, CAF Venturesome, Charity Bank, Resonance, Social Investment Scotland, Social and Sustainable Capital and Wales Council for Voluntary Action
RRLF makes the Government’s Coronavirus Business Interruption Loan Scheme (CBILS) more easily accessible to charities and social enterprises.
- RRLF loans range from £100,000 to £1.5 million, filling a key gap in the financing landscape alongside Bounce Back Loans (BBL).
- The interest rate will be towards the lower end of what is being charged by mainstream banks & other CBILS providers
- These loans will be interest-free and fee-free to the customer for the first 12 months (in line with CBILS).
- The loan term will be a minimum of 1 year and a maximum of 5 years
- Interest will be charged at 6.5% to 7% per annum for years 2 onwards (after principal payments start)