Charities and social enterprises can apply for loans worth up to £1.5m, under a scheme launched yesterday by Social Investment Business (SIB).
SIB said that it hopes the Recovery Loan Fund, which is designed to help organisations through the post-pandemic recovery, could grow to £25m.
The new scheme will work on the same terms as the programme SIB established to help civil society access finance during the coronavirus crisis. That fund provided around £28m in loans and grants to charities and social enterprises in 2020-21, backed by government guarantees.
The Recovery Loan Fund opened to applications this week.
SIB said in a statement that the fund could back charities and other groups as they look to adapt their delivery models, diversify income streams, manage cash flow, or purchase new technology.
SIB has committed its own capital to the fund, alongside founding investor the Fusion 21 Foundation.
It will be run with partners including Big Issue Invest, Charity Bank, Key Fund, Resonance Limited, Wales Council for Voluntary Action and Social Investment Scotland.
Most charities and social enterprises can apply for loans of between £100,000 and £1.5m, although smaller Black and ethnic minority-led organisations, as well as those based in Wales and Scotland, are eligible for loans starting at £50,000.
The loan terms are between one and six years, with no penalty for early repayment. Loans carry a fixed interest fee of 7.9% per year, with arrangement fees of 2.5% to 3% depending on their size.
Nick Temple, the chief executive of SIB, said: “Charities and social enterprises continue to need patience, flexibility and responsiveness in the post-Covid recovery. This fund aims to meet those needs, providing the right finance at the right time for those that need it.
“Our ongoing commitment is to be as responsive and transparent to our customers as possible.
“The Recovery Loan Fund succeeds the Resilience and Recovery Loan Fund [run during Covid-19], and we’re pleased to be building on the partnerships that have helped us achieve so much in the last 18 months, but also establishing new ones, not least Fusion 21 Foundation alongside us as a founding investor.”