More than 30 civil society leaders have signed a letter asking that the successor loan guarantee scheme is accessible to all charities, social enterprises, and community businesses.
The government’s Coronavirus Business Interruption Loan Scheme (CBILS) closes to new applicants on 31 March 2021, extended from 31 January.
Some 33 organisations have signed a letter urgently calling on the chancellor, Rishi Sunak, to consider three main requests to support them through the pandemic.
The letter says: “Unlike conventional business, they face a double whammy of rising demand and falling incomes. Government should work with social investors, who disproportionately fund organisations in areas of deprivation, to provide accessible and affordable financing solutions.
“While charities, social enterprises, and community businesses have demonstrated remarkable resilience during this crisis, they generate less surpluses than mainstream SMEs and so will need financial support that is appropriate for their specific business models.”
The letter outlines three main asks. These include maintaining a charities trading requirement. This means any successor loan scheme should continue the exemption of charities from the >50% trading criteria, as many creditworthy charities with proven income generation from fundraising and donations will otherwise be excluded.
Furthermore, it asks for a guaranteed cover matched to the distinct needs of charities, social enterprises, and community businesses. That is, it should have distinct individual guarantee cover and portfolio cap level for the social sector as unlike other SMEs, most charity, social enterprise, and community business models can only afford sub-10% interest rates.
“Without continued guarantee cover and guarantee fees at the right levels for the sector, it is not possible to attract wholesale capital to enable scalable lending to the sector,” the letter reads.
Finally, the letter asks Sunak to ensure social lenders are eligible for accreditation and there is continued guarantee allocations to the sector.
“Accrediting social lenders would ensure the availability of loan finance to charities, social enterprises, and community businesses, from national household-names, to locally led organisations delivering meals on wheels to vulnerable individuals with learning disabilities, mental health issues, and the elderly,” the letter adds.
Without continued access for more social lenders to obtain British Business Bank guarantee accreditation or guarantee allocations available to the sector, “then the scale and reach of deployment of funding into charities, social enterprises, and community businesses will be limited”.
Below is a full list of signatories:
- Stephen Muers, CEO, Big Society Capital
- Nick Temple, CEO, Social Investment Business
- Sarah Gordon, CEO, Impact Investing Institute
- Theodora Hadjimichael, CEO, Responsible Finance
- Sarah Vibert, Director of Membership and Influencing, National Council for Voluntary Organisations
- Peter Holbrook, CEO, Social Enterprise UK
- Chris Martin, CEO, Social Enterprise Scotland
- Colin Jess, Director, Social Enterprise Northern Ireland
- Rose Marley, CEO, Co-operatives UK
- Derek Walker, CEO, Wales Co-operative Centre
- Rita Chadha, CEO, Small Charities Coalition
- Tony Armstrong, CEO, Locality
- Vidhya Alakeson, CEO, Power to Change
- Vicky Browning, CEO, ACEVO
- Danyal Sattar, CEO, Big Issue Invest
- Matt Smith, CEO, Key Fund
- Daniel Brewer, CEO, Resonance
- David Hutchison, CEO, Social Finance
- Ed Siegel, CEO, Charity Bank
- Alastair Davis, CEO, Social Investment Scotland
- Alun Jones, Head of Social Investment Cymru, Wales Council for Voluntary Action
- Ed Rowberry, CEO, Bristol & Bath Regional Capital
- Tim Coomer, Business Development Manager, Co-operative and Community Finance
- Seva Phillips, Head of Arts & Culture Finance, Nesta
- Matthew McKeague, CEO, The Architectural Heritage Fund
- Ian Richards, Director, Northstar Ventures
- Holger Westphely, Acting Head of CAF Venturesome
- Adrian Bell, CEO, Allia C&C
- Hilary Laing, Operations and Finance Director, Social Tech Trust
- Mark Norbury, CEO, UnLtd
- Seb Elsworth, CEO, Access – The Foundation for Social Investment
- Tracey Preece, Director of Finance, Joseph Rowntree Foundation
- Dr Lucy Rawson, Chair, Clothworkers Foundation