Big Society Capital to set up £100m emergency loan fund for charities

The social lender is to release more details about its Emergency Liquidity Facility next week, and has asked the culture secretary for financial support

Big Society Capital is to launch a £100m emergency loan fund to help charities deal with cash-flow problems caused by the coronavirus pandemic.

BSC said its Emergency Liquidity Facility would allow trading charities and social enterprises to borrow money for working capital or to help with cash flow.

Further details about the scheme will be released next week, Third Sector understands.

The social investment wholesaler has also written to Oliver Dowden, the culture secretary, to ask for help for charities and social enterprises to ensure they survive the Covid-19 pandemic, with large sections of the economy affected by the imposed lockdown.

The letter says many charities and social enterprises could struggle to gain access the government’s £330bn scheme available to businesses, because of a lack of social lenders accredited within the scheme and the fact that charities that get less than half of their income through trading will not be eligible.

“We believe that social enterprises and charities which serve a public benefit should receive the same government support as private companies and that there should be a level playing field,” the letter says.

“Therefore, as social lenders, we are working together with great urgency to create an emergency liquidity facility which would serve this vital sector and be able to lend quickly to organisations supporting social needs facing immediate cash-flow problems or in need of working capital.”

The letter says financial support from the government will be needed to ensure the facility can provide the funding needed for charities and social enterprises during the pandemic.

It says the government can do this both by funding the emergency liquidity facility and by allowing charities access to the measures now available to businesses.

Without this support, the letter says, society faces “significant” risks, as well as the loss of a sector – including social businesses – that contributes more than £60bn to the economy each year and employs two million people.

“Cash flow is already a serious issue, with a devastating slowdown in trading conditions,” the letter says.

“Many of these organisations themselves employ or serve vulnerable or high-risk groups, and many will have low or no financial reserves, making them particularly vulnerable to the current sudden economic freeze.

“There is a real risk that many organisations that could be financially sustainable will simply fold or cease trading and never be able to recover without the ability to borrow money that is being offered by the government to private business.”

About 20 other social investment organisations have also signed the letter.

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register
Already registered?
Sign in

Latest Charity Finance Jobs

RSS Feed

Third Sector Insight

Sponsored webcasts, surveys and expert reports from Third Sector partners

Markel

Expert hub

Insurance advice from Markel

How bad can cyber crime really get: cyber fraud #1

Promotion from Markel

In the first of a series, we investigate the risks to charities from having flawed cyber security - and why we need to up our game...