Resilience and Recovery Loan Fund
RRLF closes to new applications at 11.59pm on Wednesday 31 March 2021.
Applicants will be considered on a first come first served basis and the closing date of the fund is subject to constant review.
1) What is the fund?
The Resilience & Recovery Loan Fund (RRLF) is a new fund for social enterprises and charities that are improving people’s lives across the UK who are experiencing disruption to their normal business model as a result of COVID-19. It has been established to make an existing government scheme (the Coronavirus Business Interruption Loan Scheme (CBILS - see below) more easily accessible to charities and social enterprises.
To date, RRLF has approved funding to 57 charities and social enterprises, with a total value of over £20m, with c. £9m in funding left.
The RRLF is being run by Social Investment Business (SIB) with an initial £25m investment and support from Big Society Capital. SIB is the lender, and will work with experienced social investor partners on delivery of the fund: Big Issue Invest, CAF Venturesome, Charity Bank, Resonance, Social Investment Scotland, Social and Sustainable Capital and Wales Council for Voluntary Action. Other delivery partners may be added in future. See below for where to apply.
The £25m is part of a wider package of support announced by Big Society Capital.
£4m worth of grant funding has also been made available to be used alongside the Resilience and Recovery Loan Fund to support charities and social enterprises based in and delivering the majority of their impact in England. Those applying for loans under the RRLF might be eligible for part of the total amount approved to be provided as a grant, reducing the amount repayable. Please see section 6 below for further information.
RRLF closes to new applications at 11.59pm on Wednesday 31 March 2021. Applicants will be considered on a first come first served basis and the closing date of the fund is subject to constant review.
2) Who is it for?
Many charities and social enterprises have been affected by the current crisis and lockdown, and have lost income. In many cases, grants will be the most appropriate answer (for a full range of grant sources, see SIB and Good Finance pages); other organisations will be making use of other government schemes, such as furloughing staff (see NCVO's pages for more information); others will not want to add more debt or additional loans to what they already have.
In short, we want to be clear that this fund will not work for everyone, and we only have a limited amount of money which cannot come close to meeting the scale of current need in the sector. We hope it is a part of part of the answer for some.
RRLF is intended for those organisations who face a problem because expected income and activity has been delayed or disrupted. A loan may help with this, providing working capital until normal business can commence again
Purposes that are excluded:
- Organisations that apply for a loan to provide additional financial cushion.
- Loans that refinance an organisation’s existing borrowing, except where part of the loan is being used to refinance an existing Bounce Back Loan.
The RRLF can make loans alongside other lenders or grant providers. However, consideration will be given on how the overall investment will affect an organisations financial position and its ability to repay.
Applicants cannot have both a loan supported by the Government backed Bounce Back Loan Scheme (BBLS) and Coronavirus Business Interruption Loan Scheme (CBILS) at any one time. If you take out a loan supported by the BBLS and subsequently wish to take a loan supported by the CBILS scheme (as the RRLF is), you would need to refinance the BBLS loan in full with the CBILS/ RRLF loan.
If you would like to apply for more than one loan supported by the CBILS scheme e.g. with your bank and the RRLF, you can as long as the total of all CBILS supported loans does not exceed £5m.
3) Is my organisation eligible?
This fund is only for social sector organisations: charities and social enterprises that are improving people’s lives across the UK. Our initial investor is Big Society Capital - their remit (under Dormant Accounts Act) is to invest money in organisations that 'exist wholly or mainly to provide benefit for society or the environment'; so any organisations need to be able to meet what is set out in Big Society Capital's (BSC) governance principles. This includes charities, community interest companies and community benefit societies – organisations that are not one of these legal forms (ie just a company limited by guarantee or company limited by shares) will need to demonstrate that they meet the BSC governance principles e.g. social objects in their Articles, a policy on profit distribution and an asset lock.
Eligible applicants will:
- be included on the list of qualifying entities (see Appendix 1 in the Fund Guidelines).
- if a Company Limited by Guarantee or a Company Limited by Shares be able to demonstrate the meet the BSC governance principles.
- have been operating for a minimum of two years.
- have a minimum turnover of £400k.
- have a turnover of less than £45m (whole group – if applicable).
- have more than 50% of income from trading activity (whole group – if applicable). This eligibility criteria does not apply to registered charities and further education colleges.
- trade in the UK and the loan will be used to support trading in the UK.
- be able to confirm that the organisation has been adversely impacted by COVID-19.
- be able to demonstrate that the organisation has a “viable” business proposition.
- be able to demonstrate that the organisation is not an “undertaking in difficulty”.
- be able to confirm that the loan will not be used in an “excluded sector”.
- be able to demonstrate that outcomes of the product or services provided are specifically relevant to improving people’s lives, even if improving people’s lives is a secondary outcome area of your organisation.
Further detail on eligibility criteria can be found in the Application Guidance (available to download at the bottom of this page). We recommend you read this document, particularly the eligibility section, prior to completing the application form.
4) What can I apply for?
£100,000 - £1.5 million
A minimum of 1 year and a maximum of 5 years
4% on the value of the loan
Full amount drawn down on signing
No redrawing of repaid amounts
Capital repayment holiday for 12 months on all loans
All loans amortise in monthly repayments in equal sized instalments commencing 12 months from drawdown for all loans
Option for amortisation profile of up to 5 years with an earlier maturity i.e. partial bullet repayment.
Permitted at any time without penalty
All loans of up to and including £250k will be provided unsecured.
For loans of over £250k, security will be taken in the form of a standard fixed and floating charge, where readily available with exceptions made only in exceptional circumstances.
It is important to state that this is a loan and the borrowing organisation remains liable for the debt.
5) What is the Coronavirus Business Interruption Loan Scheme (CBILS)?
CBILS is one of several schemes announced by Government to support businesses in the last few weeks. It is only available through lenders accredited by the British Business Bank – SIB is an accredited lender and will be using this scheme to support the loans made by RRLF.
Key features of the scheme include:
- Aims to support smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow.
- Provides the lender with an 80% guarantee if the borrower fails to repay. However, as stated below the borrower always remains 100% liable for the debt.
- The Government offers a Business Interruption Payment (BIP) to cover the borrower’s interest and fees for a 12-month period, so the borrower pays no admin fees and interest in year one.
The provision of the CBILS Guarantee does NOT remove any the borrower’s liability for repaying the loan.
In the event of the borrower defaulting on their loan repayments, the lender will seek to recover the full amount outstanding from the borrower.
Any monies received by the lender under the CBILS Guarantee does not reduce the borrower’s liability in any way.
- It is worth noting that RRLF will not take any personal guarantees.
6) How do I apply for a grant alongside my loan?
The Resilience and Recovery Loan Fund continues to be a loan programme and applicants must apply for a loan and may be approved for a loan without any grant award alongside it.
Grants will only be awarded alongside a loan if it is clear that the COVID-19 interruption to their business model means that they would struggle to meet a viability threshold for a loan without the grant. In this sense, the grant enables use of the loan fund – it is hoped that this will widen the reach and accessibility of the fund.
Assessed on a case by case basis alongside the loan, grants that are awarded will range in size from £40k - £300k and can be 20% to 40% of the loan amount.
During the assessment stage additional information may be requested to complete a grant assessment alongside the loan assessment.
What does this mean for you?
Your application must be for a loan and must meet the eligibility criteria. To receive part of the total sum as a grant, it has to be clear that the interruption to your business model and income because of COVID-19 means that you would struggle to take a loan without a grant element.
For example, you might need £140,000 and want to apply to the loan fund, but you're worried that the loan might be too much of a commitment due to the impact COVID-19 has had on your business/charity. You might be eligible for having part of this as a grant instead (up to 40% of the loan amount), so you would only need to repay £100,000. This could make the loan more viable for you. Our experienced social investor partners mentioned above will be able to help you think about what is right for you and your organisation.
7) How to apply
You can find our Fund Guidelines along with more detailed question guidance - available to download at the bottom of this page under 'Attached Files'.
If at any point during the process your application is unsuccessful we will do our best to provide feedback and signpost you onto other sources of support.
Frequently Asked Questions
1. What should I do if I cannot find a relevant category of primary beneficiaries in the list provided?
This category will not hold any weight when the application is assessed. Pick the most relevant from the options. It is important that there is some impact on people, whether direct or indirect.
3) What is the penalty if we cannot fully repay at the end of the loan term?
The responsibility for repayment of the loan rests entirely with the borrowing entity, and will be detailed in the loan facility document that you will sign if you are offered and choose to accept a loan from the fund. In the event of financial difficulties, where possible, SIB will look to work with the borrower to identify an acceptable action plan around loan repayment.
4) Can the loan size be increased after funds have been disbursed?
No. When the loan facility documentation has been signed and accepted and the funds drawn down, it is not possible to renegotiate the loan amount.
5) How long will the end to end process from submission to disbursement of funds take?
The timeline will vary for each individual case, depending on several factors. However, as an estimation of the end to end process, we are expecting the process from application to disbursement of funds to take an average of 3 weeks.
6) For the eligibility criteria 'trading for 2 years', if the facility has been trading for two years but not under our management for 2 years, does that qualify?
The minimum 2 years trading/operating eligibility criteria is in regard to the business itself and not specifically to the operator. So, for example, a sports facility that has been open and trading for say 5 years, but where the present operators have only been operating the facility for say 18 months, would qualify.
7) Can an applicant apply to more than one CBILS Facility
Borrowers can have more than one CBILS Facility as long as the total of all CBILS facilities does not exceed £5m.
8) Does an existing loan from a different fund within SIB have an effect on eligibility.
No, this will not affect their eligibility for the RRLF.
9) How will the ‘Business in Difficulty’ eligibility criteria be assessed?
If a charity or social enterprise is deemed to meet any one of the following measures, they will be defined as a 'Business In Difficulty' and, therefore, are not eligible for the loan:
- Had accumulated losses greater than half of their subscribed share capital. *
- The organisation entered into collective insolvency proceedings or fulfilled the criteria to be put into collective insolvency proceedings.
- The organisation previously received rescue aid that is yet to be reimbursed or restructuring aid and are still under a restructuring plan.
- If the organisation had 250 or more employees, it had fallen below both of the following solvency ratios for the two years prior:
- the company's book debt to equity ratio was greater than 7:5, and
- the company's EBITDA (earnings before interest, tax, depreciation and amortisation) interest coverage ratio was below 1:0?
*Measure 1 does not apply to organisations with fewer than 50 employees and less than £9m in annual turnover/balance sheet total; organisations that, as at December 2019, had been in existence (incorporation date) for less than 3 years; and charities or non-for-profits that are a trust or unincorporated association.
10) If an organisation is registered in the UK (and applying for a loan for UK salaries), but the charitable activity and impact is international, are they eligible for a loan under the RRLF?
No. This loan is for organisations that trade in the UK and intend to use the loan to support trading in the UK.
11) If an organisation has been in operating under its current legal status for under two years, but has existed under another status previously with a social objective, would they be considered eligible?
If an organisation can evidence that prior to their current status they did operate as a different entity with the same objective and merely transferred status, then they would be considered eligible.
If you have any other questions that aren't answered in any of the above, please contact our Enterprise and Development Team: RRLF@sibgroup.org.uk.
<< Read our press release on the Resilience and Recovery Loan Fund here. >>
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