• Access announces Growth Fund to close to new expressions of interest from social investors in December
• Eleven new social investment funds are already live and lending to charities and social enterprises
• Total funds of over £35m now available for sector
• Growth Fund expected to make available more than £55m by 2021

Organisations looking to make loans to charities and social enterprises in England have until December to apply to the Growth Fund by submitting an expression of interest. The foundation expects to have committed the whole Growth Fund programme by the spring of 2018

The Growth Fund is managed by Access and funded by Big Lottery Fund using National Lottery funding, and Big Society Capital. Originally launched in May 2015, it has seen eleven new social investment funds launch, totalling over £35m. All of these loan funds focus on offering loans of less than £150k, and usually much smaller. No security is required and many of the social investors offer a grant element alongside the loan.

Those funds include:

• Big Issue Invest’s “Impact Loans England” fund; a £5m fund offering loans to charities and social enterprises across England of between £20k and £150k;
• “GM Social Investment”, run by Greater Manchester Centre for Voluntary Organisation; which offers loans of between £10k and £50k to trading charities and social enterprises in Greater Manchester;
• Homeless Link’s Social Investment Fund; offering loans of £25k to £150k to the Homelessness sector.

Loans can be used for a range of purposes such as helping with cash flow challenges, kick starting new services and developing and growing new income streams.

IntraQuest CIC was one of the first social enterprises to benefit from a loan provided by a social investor funded by the Growth Fund. Key Fund, through their Northern Impact Fund, supported IntraQuest with a loan and grant combination to help overcome working capital challenges.

Jennifer Westwood, one of the Directors of IntraQuest said:

“We’ve got the business model nailed and the Key Fund has really helped us analyse what’s working and what’s not. It’s been a lifesaver really. As a small business, it’s very easy to go under just because people aren’t paying as quickly as needed”

Access reports than in addition to the eleven funds which are now live, they have received more than enough interest and applications to commit the whole pot. However, to allow a final opportunity for other organisations who have not yet applied for the opportunity to run a Growth Fund, Access have announced that they will close the expression of interest process at the end of December. Seb Elsworth, Access’s Chief Executive recently announced the anticipated closure date in a blog on the Foundation’s website.

On the anticipated closure of the Growth Fund to new social investors, Elsworth said:

“We have been thrilled by the interest in the Growth Fund from a very wide range of organisations who have seen the opportunity to offer loans to charities and social enterprises. This diversity matters because the sector looks to many different places for support. We are particularly pleased to see organisations who are new to social investment, like community foundations and infrastructure bodies stepping up and building a role as investors.

When we launched we expected between 15 and 18 funds to be live and to commit £45m. We have made good progress. We have also made the grant stretch further and so we expect the total available to the sector through the Growth Fund to be closer to £55m.”

The Growth Fund was created to plug a gap in what social investment products were available and offers a unique blend of loan and grant funding to social investors. This allows those social investors to overcome some of the barriers which have prevented them being able to offer the sort of finance which the sector says it most needs.

The grant helps those social investors to make smaller loans, have a greater appetite for risk and offer grants alongside the loans they make.

While the process of investing in the funds is almost complete, those funds will make loans to charities and social enterprises typically over three to four years. This means the peak lending activity from the Growth Fund’s funds will be in 2019 and will continue through 2021, although some of the funds may be fully committed sooner. 

The early evidence of the loans being made suggests that the Growth Fund is effectively plugging the gap it was set up to address. Of 73 loans made to charities and social enterprises by the end of September 2017, the average investment size was £66,000. The median turnover of the borrowers is £285k and median number of employees is six FTE. Loans have been made to organisations based in all regions of England, with the North West and Yorkshire and Humber seeing the most lending activity so far.