Charities have urged the government to rethink changes to a multimillion-pound loan scheme amid fears that they will be unable to access financial help in the new year.
The government-backed Recovery Loan Scheme, which was established in April 2021, requires applicants to generate more than 50 per cent of their income from trading. Charities are currently offered an exemption from this rule.
But that exemption ends on 31 December 2022 and experts have warned this will be “devastating news” for charities that are frozen out of financial support as a result.
A group of charities and social investment specialists, including Big Society Capital and Social Investment Business, have asked the government to reconsider the change.
SIB has approved loans through the scheme worth more than £5m so far to charities and social enterprises, it said.
BSC said in a statement that the proposed change was “devastating news for several charities and social enterprises across the UK, who are doing vital frontline work and are facing funding challenges like never before”.
One charity that accessed the government scheme, Magpas Air Ambulance, said its work developing a new airbase “would not be possible without the government-backed loan scheme”.
Next Step Initiative, a social enterprise in Glasgow that provides training to African communities across Scotland, said that without access to the scheme it could not have extended its mentoring and coaching work to 400 more young people and their families.
Daryl Brown, chief executive of Magpas Air Ambulance, and Beltus Ojong Etchu, chief executive of Next Step, said: “We urge the government to make the policy changes needed for charities like us, who earn most of our income through fundraising, grants, and donations, to access this important lifeline.
“Our budgets are stretched and services [are] in demand now more than ever.”