Social impact investors call on government to extend coronavirus loans for third sector

Big Society Capital and eight other social investors are calling on the government to extend the deadline for charities and social enterprises to submit applications to the Coronavirus Business Interruption Loan (CBIL) Scheme to 4 November. The current deadline for CBIL Scheme applications is 30 September. However, from conversations between social lenders and borrowers in its pipeline, Big Society Capital understands many charities and social enterprises have delayed their applications while they apply to grant programmes first, such as the National Lottery Community Fund. The investors, which also include 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, argue that given their size, most can only undertake one application at a time. This means many will only find out the outcome of their grant application this month, by which time it will be too late to apply for CBILS. Many charities have sought additional funding, with half (50%) surveyed for a Pro Bono Economics tracker survey saying they have applied for emergency support from non-government sources and more than one-in-three (37%) applying for a share of the £900 million of support earmarked for the sector by the government. However, Pro Bono Economics points out that such sources are not available to all, and that one-in-ten (12%) of charities say they expect to cease operating altogether before the start of December. 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 background Big Society Capital provided the initial £25 million in funds for the Resilience and Recovery Loan Fund (RRLF), 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.   UPDATE The government has since announced that it will extend the CBILS scheme for the social sector until the end of November. Commenting on the new, Stephen Muers, Interim CEO of Big Society Capital, said: “We are delighted that the Chancellor has thrown social enterprises and charities a lifeline and extended the Coronavirus Business Interruption Loan Scheme (CBILS) for all businesses until the end of November. “For many charities, Covid-19 is an existential threat, hitting them simultaneously with both a surge in demand for their services and a dramatic drop in donations. Charities and social enterprises are currently struggling to survive and some face serious cashflow problems. Without this extension, we could have potentially seen up to one in ten charities cease their operations before the end of the year. “In the short term, this extension will provide social enterprises and charities with additional time to secure much-needed finance. We welcome the fact that the Government is exploring a successor loan guarantee scheme. During the pandemic, we have seen how critically important these organisations are, supporting local communities and helping some of the most vulnerable. We look forward to working with Government to ensure that there is a long-term guarantee for the social sector.”

from UK Fundraising https://ift.tt/3hXSbXB