Yesterday the BBC reported on the struggle social enterprises are having accessing emergency funding to survive COVID-19, with the headline; “Social businesses shut out of government support”.
Social ventures are finding that the Bounce Bank Loan Scheme (BBLS) and Coronavirus Business Interruption Loan Scheme (CBILS), which are meant to help them cope with income loss caused by the pandemic, are not fit for purpose. As we outlined in our last blog, there are 2 key issues with them:
1) Many ethical and social banks that social enterprises bank with do not provide Bounce Back Loans.
2) Social enterprises are not able to open new accounts with participating banks.
The BBC piece features the Restore Trust in Bristol, who are one of many social ventures who have faced long delays getting necessary support. They told the reporter that their Chief Executive, “tried every lender on the government's list… none of them would let her open a new account and get a bounce-back loan.”
The social enterprise sector has been speaking out on for months about these challenges, and it is vital that changes are made without further delay. Whilst grants have been made available from government funds and delivered by social enterprise support organisations, including UnLtd, they have only been able to support 1% of the social enterprise sector. The latest sector survey shows that Covid-related uncertainty, trading income and other funding/finance are the leading concerns for social entrepreneurs in the year ahead.
On 18th Jan we wrote to Minister John Glen (Economic Secretary to the Treasury and City Minister) to ask that he meet with us to work together to resolve these issues. You can read that letter here.
We have now received a reply from the Minister, but unfortunately he put the responsibility for change largely back on the banks saying that, “the nature of lenders’ infrastructure and their approach to loan processing remain under commercial discretion.” (Read his full response)
Whilst social ventures are making tremendous impact on the ground, the Minister is not taking swift action, which is within his power, to support their needs.
However, we’re not giving up. We have pursued the offer of meeting with other officials, and we are writing back to offer solutions to the problems John Glen acknowledged in his letter.
We can offer answers for current and future Government-backed emergency loan schemes to make them work quicker, better and more inclusively.
In the future, we hope that the Government will also do more to ensure that providers run Government-backed schemes in an equitable way that ‘levels-up’ and ensures fair access for social entrepreneurs. Minimum standards, reporting requirements, and bespoke additional helpline support for ‘left-behind’ groups could make a real difference.
The government has extended the deadline for businesses to apply for the loan scheme up to 31st March, but whilst this is useful to many businesses, if the access issues affecting social ventures are not addressed, they will continue to be locked out of support. The measures announced earlier this month to extend repayment periods for the loans shows that the government can still deliver improvements to the schemes.
We hope the government can take this opportunity to listen to the evidence and learn from the oversights and mistakes made when the scheme was initially launched.
Every delay to these changes has an impact on the sustainability of social business through this pandemic, and on people’s lives. Our recent learning paper, ‘How social entrepreneurs are supporting communities through COVID-19’, draws on the wealth of evidence which shows that the impact of social entrepreneurs cannot be understated in this time.
Whilst we continue to speak to government officials on this issue, we will also liaise with banks to see what more they can do to take on new customers, and swiftly offer social entrepreneurs access to government-backed emergency loans.
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