Smaller loans for charities and social enterprises, delivered through a range of intermediaries
The Growth Fund is designed to provide the finance that charities and social enterprises need when they are at early stages of growth or diversifying their business models. The fund is aimed at organisations which will probably not have taken on social investment before.
The finance will be small, flexible, and affordable and will be available in simple products. The finance will enable organisations to create more social impact.
Typically, this type of finance has not been readily available. This is often because the lender considers such finance to be high risk and therefore charities and social enterprises find it unaffordable. Or the finance needs to be of a minimum size to cover deal costs which is too big for an organisation’s stage of development.
This ‘gap’ represents lost opportunities for organisations to change more lives or deliver more services for individuals and communities.
What is the problem that the Growth Fund is trying to solve?
The Growth Fund aims to tackle the reasons for this financing gap, namely:
- the shortage of unsecured, smaller, flexible loans for charities and social enterprises that are seeking finance to test their model, survive and grow
- the high costs for social lenders to deliver this type of finance, which restricts supply
- the lack of track record and often the perception of high risk which prices loans out of reach for social enterprises and charities.
The Growth Fund is Access’s first programme and it has been designed with its partners, Big Lottery Fund and Big Society Capital. Each partner brings its unique resources and expertise to deliver the Fund’s aims.
What will the Growth Fund offer?
Access will manage the Growth Fund in a wholesale capacity, working through social lenders, who will set up funds and make loans to charities and social enterprises. The Growth Fund offers social lenders the opportunity to provide charities and social enterprises with the type and amount of finance they need, when they need it.
The Growth Fund offers charities and social enterprises up to £150,000 of flexible finance by combining grants with loans into simple products.
Across its portfolio as a whole, the Growth Fund will seek to achieve a geographical spread of users and end beneficiaries across England, as well as support a range of social issues.
What does Access aim to achieve with the Growth Fund?
The Growth Fund is a response to evidence gathered from and by the sector on the difficulties that many charities and social enterprises find in seeking appropriate social investment. The Growth Fund aims to:
- Help more established organisations be able to maintain and increase their social impact and their sustainability
- Enable newer and early stage charities and social enterprises deliver social outcomes, by providing them with the finance they need to continue and grow
- Improve the delivery capacity of these organisations so that they are able meet the needs of their target group
- Share learning by being open, transparent and collaborative around best practice to the benefit of both users of the Growth Fund and of other funders and bodies interested in supporting social impact. Over time, this helps to ensure that limited resources are used to greatest effect.