Social Investment Business has announced the launch of its new Recovery Loan Fund to support UK charities and social enterprises to survive, recover and grow following the Covid-19 pandemic, alongside founding investor the Fusion21 Foundation. The Fund will work under the terms of the Government’s Recovery Loan Scheme and will offer attractive terms including: loans of £100k-£1.5m (with loans upwards of £50,000 for BAME-led organisations and those based in Wales or Scotland), a loan term of 1 to 6 years, and a fixed interest fee of 7.9% per year, with an arrangement fee of 2.5% to 3%.
Charities and social enterprises - many of whom are a vital part of our social infrastructure - are experiencing continued disruption to their normal business model in a post-Covid recovery. Demand for funding is now shifting towards pivoting business models, diversifying income streams, and remote service delivery. The Recovery Loan Fund will provide repayable and flexible finance to charities and social enterprises directly affected by the current crisis. It has been established by SIB to make an existing government scheme (the Recovery Loan Scheme) more accessible to charities and social enterprises.
- The Fund is for charities and social enterprises who have been impacted by Covid-19 and need funds to help them to survive, recover and grow.
- Many organisations are also looking to refinance short-term debt - all loan purposes will be considered from applicants, including refinancing.
How does the Recovery Loan Fund work?
Eligible social organisations will be able to apply for the Fund from 18th October 2021 and the deadline for applications is Friday 20th May 2022
- Loans worth £100,000-£1.5m. BAME-led organisations and those based in Scotland or Wales will be able to apply for loans upwards of £50,000.
- A loan term of 1-6-years, with no penalty to repay early
- A capital repayment holiday for the first year, with regular payments thereafter
- A fixed interest fee of 7.9% per year, with an arrangement fee of 2.5% to 3% - depending on size of the loan
There is a full list of information on the SIB website page for the fund.
- The Fund is managed by Social Investment Business alongside founding investor the Fusion21 Foundation and fund partners Big Issue Invest, Charity Bank, Resonance, Social Investment Scotland, Key Fund, and Wales Council for Voluntary Action and makes the Government’s Recovery Loan Scheme (RLS) more easily accessible to charities and social enterprises.
- The UK Government via the British Business Bank provides the Lender (SIB) with a Guarantee in case the Borrower is unable to re-pay the loan. The Guarantee is provided to the Lender (SIB) and not the Borrower.
- The provision of the Guarantee does NOT remove any of the Borrowers liability for repaying their loan. In the event of the Borrower defaulting on its loan repayments, the Lender (SIB) is entitled to seek to recover the full amount outstanding from the Borrower.