A major social investor is planning to launch a £100 million emergency loan fund for charities affected by Covid-19, providing it can receive assurances from the Government.
It comes after Big Society Capital (BSC) asked the Government and other lenders to band together to offer the same support to charities as has been done with businesses.
Currently, charities with less than half of their income through trading will not be eligible for the business loan scheme, meaning they are likely to get left behind.
In an open letter to the Government, the financier said there is an “urgent opportunity” to help ineligible trading charities and sociable enterprises by providing loans through an “emergency liquidity facility”.
Teaming up with 20 other social investment organisations, including the Social Investment Forum, BSC said the new finance facility should match the £330 billion liquidity support scheme offered to businesses, at least in its ability to guarantee loans and bolster cash flow.
“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 cashflow problems or in need of working capital,” the group writes.
“The Facility would need significant financial backing to enable this in the same way as the Government-backed Coronavirus Business Interruption Loan Scheme (CBILS) is guaranteeing the loans which will be offered to businesses through the British Business Bank.”
According to the latest figures, social businesses and trading charities contribute more than £60 billion to the economy each year and employ approximately two million people. However, many of these organisations face a “devastating slowdown in trading conditions”, resulting in inoperable cash flow positions.
Concluding the letter, the group writes: “We believe that when we as a country get through this extraordinary period, we will need a vibrant social business sector to help us rebuild the fabric of society. We hope the Government will work with us to secure the future for this sector and help prevent the widespread closure of these organisations in the coming weeks.”