Flexible Finance for the Recovery

Information for experienced social investors to support flexible finance for crisis recovery

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In May 2020 Access received £30m of grant funding from dormant accounts to create new blended finance programmes in the social investment market.

That funding has been earmarked for two main purposes:

  1. Grant to provide blend to support emergency lending to charities and social enterprises, facing financial challenges due to the impacts of Covid-19 (“Emergency Lending”)
  2. Future blended finance initiatives, which create more sources of more patient and flexible repayable finance, to serve the capital needs of charities & social enterprises (“Flexible Finance for the Recovery”)

This programme relates to the second of these initiatives, to which Access will commit at least £21m. The programme is seeking to address gaps in the supply of more patient and flexible social investment products for charities and social enterprises which are not widely available in the current market place. This is partly caused by the low or uncertain expected financial returns of these investments (for the borrower, social investor and capital providers). It aims to address a different, longer term, and potentially riskier financing need than is met by (for example) the Growth Fund or other Access programmes, whilst also trying to attract capital providers with differing risk appetites to blend with our grant.

Access is a wholesaler of grant subsidy into social investment funds and other initiatives. Therefore we do not make funding available to charities and social enterprises directly. If you are a charity or social enterprise looking for support or to find out more about social investment please visit Good Finance.

Consultation to Date

Access has finalised recruitment into a first development cohort for the Flexible Finance for the Recovery programme. The programme targets the creation of new types of patient and flexible investment finance to support organisations in a COVID recovery phase. We have been very encouraged by the level of response to the opportunity that the programme can provide, with many more applications to join the cohort than we had expected. 

The cohort includes nine emerging ideas covering a range of different proposed investment products to meet different financing needs in the future.  All cohort members have demonstrated how they could develop products which meet the key definitions of “patient” and “flexible” which are fundamental to the aims of the new programme.

We sought proposals from investors who felt that they had a good chance of finalising a full investment proposal by March 2021, and all of those selected into the cohort are already progressing their plans.  However all have more work to do in one or more areas, including addressing issues of equality, diversity and inclusion, which the programme is particularly prioritising.

We don’t expect however that all ideas will manage to come forward with viable proposals by that first target date, and we plan to make an announcement before March 2021 about further opportunities for others to submit ideas into the programme.

The nine proposals being worked up are:

Charity Bank  expansion of small, unsecured lending programme with flexible repayment terms complemented by ‘patient capital’ grants

Crowdfunder/Triodos  blended finance solutions combining reward based crowdfunding with crowdfunded equity and debt

Key Fund  a flexible finance facility which will allow investees to draw finance as required, up to a maximum amount, and also repay flexibly when cash is available

Resonance – two proposals   (1) helping communities to own assets and meet local needs, through sustained support (local partnerships and community coordinators) and access to patient and flexible finance (2) a suite of products to facilitate bespoke investment solutions, tailored to individual enterprise growth needs – including equity-like options, flexible loans and grant blend

SASC  providing a blend of grant and loan to small and medium sized non-profits, typically to acquire property or other community assets

Social Tech Trust  quasi-equity (revenue participation) for established but early stage tech for good organisations

Sumerian  provision of quasi-equity alongside pre and post investment business skills support to start-up/growth stage charities and social enterprises

UnLtd/Big Issue Invest  quasi-equity products targeting growth-oriented BAME-led organisations/BAME-founders