The fund will make long-term loans of more than £100,000 to community development finance institutions that have difficulty accessing finance from commercial sources. Applicants must demonstrate their capacity to repay, as well as the prospect of a positive social or regenerative impact from the loan. Interest rates and repayment terms vary according to risk and purpose. In the first year of operation, the fund expects to make around six loans of between £150,000 and £200,000.
Big Invest UK has been in discussions with a number of borrowers, and plans to issue its first loan in early March. "The aim is to bring socially excluded borrowers back into the market," said Leonie Hirst, chief executive of Big Invest.
The fund will not be widely publicised until the end of 2005, and early applications have been encouraged through the Community Development Finance Association. There are plans to highlight the fund and the social lending sector in a special edition of The Big Issue magazine next year. "It makes it easier to tell the story if we can launch this at a time when we can demonstrate the social return and regenerative impact of this kind of lending," said Hirst.
Although Big Invest originally planned to make loans to social enterprises as well, Hirst said that, for the first year, it would concentrate solely on CDFIs.
The Big Invest project is the brainchild of John Bird, founder of The Big Issue. Bird set up the magazine with financial backing from The Body Shop co-founder Gordon Roddick after struggling to secure investment from mainstream lenders.
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