Charities have been given an exemption to the requirement that they derive at least half of their income from trading to be able to access one of the government’s coronavirus loan schemes.
The Coronavirus Business Interruption Loan Scheme enables organisations with annual incomes of up to £45m to access loans of up to £5m for up to six years.
When the scheme was first launched last month, many charities were excluded from being able to apply because the criteria stipulated that applicants needed to make at least 50 per cent of their income from trading.
But the British Business Bank, which is overseeing the scheme, has amended the eligibility criteria to say that registered charities are exempt from the requirement that 50 per cent of their income must come from trading activity.
Richard Sagar, policy manager at the Charity Finance Group, said that although the move was welcome charities were being turned down for the scheme.
“This is a welcome announcement that removes one of the stumbling blocks for charities to make use of the CBILS scheme and demonstrates that government is listening to our concerns,” he said.
“But even when charities do meet the requirements of the scheme, they are being turned away by accredited lenders. Government needs to learn the lessons from CBILS to make sure that the proposed ‘bounce-back’ loans do work for the charity sector.”
He said there were still fundamental concerns that charities were being “saddled with debt at a time of profound uncertainty about their future finances”.
He said: “This could hamper their financial sustainability and ability to deliver public benefit when the country emerges from the Covid-19 emergency.”