Capital of the great society is to launch a £ 100 million emergency loan fund to help charities deal with cash flow problems caused by the coronavirus pandemic.
BSC said its Emergency Liquidity Service would allow commercial charities and social enterprises to borrow money for working capital or to help with cash flow.
More details on the plan will be released next week. Third sector understands.
The social investment wholesaler has also written to Oliver Dowden, the culture secretary, to ask charities and social enterprises for help to ensure they survive the Covid-19 pandemic, with large sectors of the economy affected by the imposed shutdown.
The letter says that many charities and social enterprises could find it difficult to gain access to the government’s £ 330 billion scheme available to businesses, due to the lack of accredited social lenders within the scheme and the fact that charities that they earn less than half of their income through trade they will not. be eligible.
“We believe that social enterprises and charities that serve a public benefit should receive the same government support as private enterprises 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 line that serves this vital sector and can quickly make loans to organizations that support social needs facing immediate cash flow problems or they need working capital. “
The letter says that financial support from the government will be needed to ensure the facility can provide the necessary funds for charities and social enterprises during the pandemic.
It says the government can do this by funding the emergency liquidity facility and allowing charities to access the measures that are now available to businesses.
Without this support, the letter says, society faces “significant” risks, as well as the loss of a sector, including social enterprises, which contributes more than £ 60 billion to the economy each year and employs two million people. .
“Cash flow is already a serious problem, with a devastating slowdown in business conditions,” the letter says.
“Many of these organizations 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 organizations that could be financially sustainable will simply retire or go out of business and can never recover without the ability to borrow the money that the government offers to private companies.”
About 20 other social investment organizations have also signed the letter.