Charities have been exempted from the requirement that they derive at least half of their income from trade in order to access any of the government’s coronavirus loan schemes.
The Coronavirus Business Interruption Loan Scheme allows organizations with annual revenues of up to £45m to access loans of up to £5m for up to six years.
When the scheme first launched last month, many charities were barred from applying because the criteria stated that applicants had to derive at least 50% of their income from trade.
But the British Business Bank, which oversees the scheme, has changed the eligibility criteria to say that registered charities are exempt from the requirement that 50% of their income must come from commercial activities.
Richard Sagar, head of policy at Charity Finance Group, said while the move was welcome, charities were being turned down for the scheme.
“This is a welcome announcement that removes one of the barriers preventing charities from using the CBILS program and demonstrates that the government is listening to our concerns,” he said.
“But even when charities meet program requirements, they are turned down by accredited lenders. The government should learn from CBILS to ensure that the proposed ‘rebound’ loans work for the charitable sector. »
He said there remained fundamental concerns that charities were ‘debt-ridden at a time of deep uncertainty about their future finances’.
He said: “This could hamper their financial viability and ability to deliver public benefits when the country emerges from the Covid-19 emergency.”