Last month we set out the principles to which Access would be working in shaping our response to the crisis. These included listening first to the experiences and changing needs of our partners. They also included seeking to continue to fill gaps in the social investment ecosystem where they exist, which has been our role since we were created in 2015.
Last time I wrote about how our partners on our enterprise development and Local Access programmes are responding.
Over the last couple of weeks we have been engaging extensively with the partners who deliver the Growth Fund, and identifying what additional support (beyond the changes we made in March) might be necessary.
The 14 social investors delivering the Growth Fund have told us that there has been a significant take up of interest and capital repayment holidays for their borrowers, and well over 50% are currently pausing repayments as they manage their way through the crisis. There is understandably lots of uncertainty about when it will be possible for repayments to begin again.
The social investors are also reporting that there is a clear need for grant to support many of the organisations in their portfolios as further debt will not be appropriate. The urgency of this need has been highlighted by research that Social Investment Business have undertaken on their portfolios, which reports that 66% of organisations are experiencing medium/high risk to both income and cash reserve, and that 22% of VCSEs have imminent difficulties paying staff without support and 19% have imminent difficulties paying operational costs without support. There is also a concern that some of the recently announced government schemes will not meet the needs of those organisations.
In addition to the need for further grant to support the financial position of borrowers, Growth Fund investors have highlighted the need for business support to help them to understand how to navigate the range of support offers which are in place, plan for various future scenarios, and seek to transition their business model over the longer term.
Growth Fund lenders are offering follow-on investment for those organisations who can take on further debt to help them through the crisis, especially where there is a simple cash flow need to help an organisation bridge to certain income in the future (for example until payment comes from the Government’s furlough scheme). However there are some longer term questions about how the Growth Fund can best meet future demand for lending from the sector, where risk may be harder to assess.
We are working closely with Big Society Capital and the National Lottery Community Fund to identify what further tools we can make available to Growth Fund investors so they can offer more support to their existing portfolios of investors; and over the longer term how the Growth Fund best meets the needs of future borrowers.
Over the last few weeks there has been more clarity on the support which Government will provide to the sector as a whole, and more details have emerged about the Recovery and Resilience Loan Fund (RRLF). The National Lottery Community Fund have also published details about their funding priorities and the response to the crisis. As these key pillars of the support ecosystem for the sector become clearer we are working hard to understand what gaps there will be in the social investment ecosystem which Access can and should seek to fill.
In particular we are exploring the need for specific business support to sit alongside the RRLF if there is a need which is different from what is already covered by the Reach Fund. We are also advocating for further blend to sit within the RRLF structure, based on lessons from the Growth Fund and other blended initiatives like Futurebuilders.
We will continue to provide updates here as we make further decisions. For charities and social enterprises do look at the Good Finance COVID 19 Resource Hub for more information about the support available across the sector.
