By blending loans with grants to bridge the finance gap between what social investors can offer and what charities and social enterprises need
The Growth Fund provides funding on a wholesale basis, through social investors. Charities and social enterprises must apply to social investors for Growth Fund finance, not directly to Access.
Social investors apply to Access for a blended financial package, comprising a grant from the Big Lottery Fund alongside a loan from Big Society Capital. The social investor is permitted to substitute or match Big Society Capital loan funding with third party finance or its own funds (provided that no private benefit accrues) although that is not generally expected or required.
Financed in this way, social investors are able to offer a wider range of funding products to a wider group of charities and social enterprises than if solely accessing loan finance themselves.
The Big Lottery Fund grant can be used by social investors for the following:
A. to support the higher transaction costs associated with managing smaller amounts of finance to these organisations.
B. combined with loan finance and lent on to charities and social enterprises, allowing the social investor to take greater risk in their lending.
C. provided as a grant to the charity or social enterprise alongside the loan (as long as at least 50% of the total funding is loan). This tranche is optional.
The Growth Fund is currently open for applications from social investors until the funds are dispersed. This is anticipated to occur in 2018.
Having received the funds, social investors are able to make loans over a period of 3-5 years, with repayment periods of a further 3-5 years.
Who can apply to the Growth Fund?
As the Growth Fund is provided on a wholesale basis, through social investors, charities and social enterprises will not be able to apply for Growth Fund finance directly to Access, but rather via a social investor.
Social investors or aspiring social investors can apply to Access for funding – namely a grant from Big Lottery Fund alongside a loan from BSC. In this way, social investors will be able to offer a wider range of products to a wider group of charities and social enterprises than if solely accessing loan finance themselves.
The Growth Fund is open to expressions of interest – please complete the Expression of Interest (EOI) form if interested.
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