The government’s Coronavirus Business Interruption Loan Scheme has been expanded to allow more charities to benefit – with the ability to borrow up to £5m over 6 years if certain conditions are met.

To be eligible under the scheme, charities no longer have to generate more than 50% of their income from trading. This previously prevented most charities from applying.

Under the scheme, charities can access loans of up to £5m for up to 6 years. The government also covers the first 12 months of interest payments and any lender-levied fees.

To be eligible, a charity must:

  • be based in the UK
  • have a turnover below £45m
  • have a viable borrowing proposal
  • be able to show your charity has been adversely impacted by Covid-19

More details about the scheme can be found here.

Some key issues to consider include:

  • Is taking on debt is in the best interests of the charity and its beneficiaries both now and in the future? What will the loan allow you to do and could this be achieved through other means e.g. partnership working?
  • Although the loans are now available to charities, some charities will have restrictions in their governing documents which prevent or restrict their borrowing. Trustees should check they have the power to borrow before agreeing a loan.
  • As with any loan, trustees must examine financial forecasts. This involves assessing your expected unrestricted income and outgoings over the coming years. Are you able to repay the loan and what are the implications on servicing dept on the ability to deliver your purpose?

Although loans up to £250,000 carry no personal guarantee, higher loans may. This means there could be implications for individual liability and trustees should understand this risk by discussing it with their lender.

A charity’s legal form also has implications for signing off loans and the personal risks involved. Although we understand larger unincorporated organisations will be eligible, trustees of these organisations need to be aware that there are increased risks for their personal liability

The Charity Commission has produced some guidance on managing financial challenges through Covid-19 which you can read here. 

And other funding opportunities, including other forms of loan finance can be found on Knowhow here.


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