Working capital loans for charities and social enterprises experiencing disruption to their normal business model as a result of COVID-19.
The Resilience and Recovery Loan Fund (RRLF), offered by Social Investment Business (SIB), has had the deadline extended to make more loans to charities and social enterprises affected by the coronavirus pandemic. It offers:
- Maximum loan amount now £1.5m (minimum still £100k)
- Interest-free & fee-free for the first 12 months
- Loans available up to a maximum of 5 years
- Faster than applying for a standard loan
Eligible social organisations can apply for RRLF loans until 11.59pm on Wednesday 31 March 2021.
The first loans have been approved and we have received some very positive feedback:
“Many thanks for your help, it was a very smooth and quick process and the Charity Bank team were a great support. This loan means that we will now be able to plan ahead with confidence that we can survive the Covid crisis...” - Zoe Raven, CEO, Acorn Early Years Foundation
“Once again, Charity Bank comes to the rescue. The application, approval and acceptance processes were seamless... It is very comforting to know that you have an understanding friend in your corner when you need it most.” - Dr Tom Pey, Group Chief Executive, The Royal Society for Blind Children
To date, RRLF has approved funding of over to £15m to 50 charities and social enterprises.
Eligible charities and social enterprises based in England only will be considered for a grant alongside the loan if it is clear that a loan without the grant will make the funding unviable. Where a grant is awarded alongside the loan, it will be between £40k-£300k (20-40% of any approved loan amount).
This page gives an overview of RRLF, including eligibility criteria, and the role of Charity Bank in delivering this Fund. Prospective eligible applicants should also refer to the Resilience and Recovery Loan Fund page on the Social Investment Business website where full details of RRLF can be found.
What is RRLF?
The Resilience and Recovery Loan Fund (RRLF) is a new emergency loan fund which will provide repayable finance to charities and social enterprises who are experiencing disruption as a result of COVID-19 and is intended for such organisations who have an otherwise viable business model. It has been established to make the Government’s existing Coronavirus Business Interruption Loan Scheme (CBILS) more easily accessible to these entities.
RRLF is managed by Social Investment Business* (SIB) with an initial £25m investment and support from Big Society Capital*. Delivery partners, such as Charity Bank, are helping to support eligible charities and social enterprises with the initial stages of their application.
It is important to note that RRLF is NOT appropriate for everyone and will not work for all charities and social enterprises. For many, grants or other support may be more appropriate (for potential alternative sources, see our COVID-19 funding page) and organisations should also consider other government schemes (see our COVID 19 Resource Hub for more information). For smaller loans of up to £50k organisations can consider the Government’s Bounce Back Loan Scheme.
Who is the Fund intended for?
RRLF is intended for charities and social enterprises who have been adversely affected by COVID-19. Specifically, RRLF is aimed at UK organisations which fit certain eligibility criteria – please see section below.
A RRLF loan can be used to:
- provide working capital until normal business resumes
- cover delays in trade payments
- meet increased demand for services
Exclusions include loans that refinance an organisation’s existing borrowing.
Applicants should also be aware that any monies received under the CBILS does not reduce the borrower’s liability in any way – as with any loan product, the borrower remains 100% liable.
Is my organisation eligible?
This Fund is only for UK charities and social enterprises which fulfil the eligibility criteria of both the Fund and CBILS – the full list of eligibility criteria can be found on the SIB website and includes:
- registered charities, community interest companies, community benefit societies – in line with Big Society Capital’s governance principles.
- have a minimum turnover of £400k.
- have been trading for a minimum of two years.
CBILS eligibility that applies to the fund includes that organisations must:
- be UK-based.
- have a turnover of less than £45m (whole group).
- have a minimum 50% of income from trading (registered charities and further education colleges are exempt from this requirement).
- self-certify they have been adversely affected by COVID-19.
What are the RRLF’s key product details?
Key features of the product for eligible organisations can be found in SIB’s website and include:
- initially loans will be for between £100k and £1.5m.
- these loans will be interest-free and fee-free to the customer for the first 12 months (in line with CBILS).
- the loan term will be a minimum of 1 year and a maximum of 5 years.
- loan term 1-3 years: interest will be charged at 6.5% per annum for years 2 and 3 (after principal payments start).
- loan term >3 years to 5 years: interest will be charged at 7% per annum from year 2 (after principal payments start).
How can I apply and how long will it take?
There is an application portal on the SIB website which is now live. The first page of the application is intended to give clear guidance on your likely eligibility. The aim is for the process to take 2-4 weeks from start to finish.
What is the Coronavirus Business Interruption Loan Scheme (CBILS)?
CBILS is one of several schemes announced by the Government to support businesses in the last few weeks. It is only available through lenders accredited by the British Business Bank (in this case SIB) and is designed to support small businesses (under £45m turnover).
It is important to state that this is a loan and the borrowing organisation remains 100% liable for the debt.
What is Charity Bank’s role and what fees will they take?
Charity Bank will support applicants through the initial stages of the loan process and recommend for final approval by SIB applications that it believes meet the programme criteria for funding, but Charity Bank will not make lending decisions.
SIB will pay Charity Bank a percentage-based fee on the amount of the loan SIB advances to the applicant.
Charity Bank has no discretion on the eligibility criteria or lending decisions. Eligibility is determined by Government guidelines for the Coronavirus Business Interruption Loan Scheme (CBILS) and SIB’s eligibility criteria and lending decisions are made by SIB.
*Social Investment Business (SIB) provide finance to create fairer communities, helping impact-led organisations improve people’s lives. Big Society Capital’s remit (under the Dormant Accounts Act) is to invest money in organisations that 'exist wholly or mainly to provide benefit for society or the environment'.
About Charity Bank
Charity Bank is the loans and savings bank owned by and committed to supporting the social sector. Since 2002, we have used our savers’ money to make more than 1,000 loans totalling over £300m to housing, education, social care, community and other social purpose organisations.
Nothing in this article constitutes an invitation to engage in investment activity nor is it advice or a recommendation and professional advice should be taken before any course of action is pursued.