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Loan/Grant Programme for Charities and Social Enterprises Extended to 13 November

on Thursday, 01 October 2020.

Chancellor Sunak has extended the deadline for applications to the working capital loan/grant programme specifically aimed at charities and social enterprises from 30 September to 13 November at 5pm.

The Resilience and Recovery Loan Fund ('RRLF') is a pot of £25 million in loan money and £4 million in accompanying grants intended for charities and social enterprises that are improving people’s lives across the UK. This extension was noted on the website of the RRLF’s accredited lender, Social Investment Business (see FAQ 12).

Applicants need not be registered charities, but they must be prepared to demonstrate that:

(i) their assets are devoted to social benefit

(ii) helping people in need is a principal outcome of their product or services and

(iii) they are under stress caused by COVID-19

Eligibility filters ensure that proceeds will be used to support trading in the UK, and to exclude certain entities (such as state-funded schools and further education organisations) and use of proceeds (most refinancing).  An applicant’s turnover must be between £400K and £45 million.

Loans will be in the range of £100K-£1.5 million with a term of between 1 and 5 years, and if it is clear that a loan will be useless unless accompanied by a grant, up to 40% of the requested loan can be extended as a grant.

All loans over £250K will be secured, and SIB emphasises that it will seek to recover its loan in the event of default. A loan under RRLF compares well to a loan from a commercial bank because of:

(i) the promised speed of funding (within three weeks' of application)
(ii) there is no arrangement fee
(iii) there is no interest charged or principal repayment during the first year
(iv) the credit evaluation is likely to be more lenient

Yet many charities under stress will prefer to obtain non-repayable funding if possible, and RRLF applications to date clearly have not exhausted the pot.

Any charity interested in applying for an RRLF loan will benefit from a lawyer’s help in completing the lengthy application form and questionnaire and in negotiating the terms of the loan and security agreements.

Our experienced team of charity and commercial lawyers can assist efficiently and at reasonable cost.

For more information on how we can help, please contact Thomas Dick on 07568 530348, Chris Knight on 07468 698954 or Shivaji Shiva on 07788 313 298or complete the form below.

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