Wednesday, September 28, 2016

News: £5.5m Northern Impact Fund launches for social enterprises

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Key Fund, a long-standing investor in community and social enterprises, is delivering the Northern Impact Fund, aimed at new and early stage enterprises who are seeking finance to support growth.

Established in South Yorkshire in 1999, Key Fund has pioneered an approach to revitalise communities decimated by the collapse of the coal and steel industries. By first administering small social capital grants, under £10,000, to support community economic development and then moving into social investment products, with a focus on increasing financial and impact sustainability.

All Key Fund clients have been turned down by mainstream investors because they don't fit their lending criteria. Key Fund has directly invested over £35m since 1999, with an enviable track record in business success and an average loss rate of only 4.4% – despite its investments being higher risk on paper.

The Northern Impact Fund is now open to applications from social enterprises operating in the Midlands, North East, North West and Yorkshire and the Humber.

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Matt Smith, CEO of the Key Fund, said: "With this fund we're offering finance of up to £150k, but typical investments will be around £50k, with up to 20% of the amount available as grant. The Key Fund was one of the early pioneers in this space, and our original model was based on a grant and loan mix, so we’re really excited to be going back to that original model. It’s long been our belief that grants can play a very important role in helping new and smaller social enterprise become more robust.

"We have always believed small organisations can deliver big impact in disadvantaged communities. In this current economic climate, we are seeing good businesses struggling and access to finance and support has never been so crucial, so we’re delighted to be delivering the Northern Impact Fund."

The grant is aimed to help cover the initial costs related to social impact, such as investing in training for young people and staff, as the enterprise gets up and running.

The Northern Impact Fund has received support from the Growth Fund, which is an initiative of Access – the Foundation for Social Investment. The Growth Fund has been designed to increase the availability of small, affordable, unsecured loans for charities and social enterprises. The Growth Fund totals £45m and provides a blend of loan from Big Society Capital and grant from the Big Lottery Fund, to social investors across England. This allows those social investors to offer smaller loans and take much greater risk than some other lenders are able to.

Seb Elsworth, chief executive of Access, said: "The blend of loan and grant, which we make available to social investors, like the Key Fund, means that they can provide smaller loans on affordable terms with appropriate support. We are also encouraging the development of partnerships which can help to open access to social investment for more charities and social enterprises to help them to sustain and grow their impact."

Key Fund website

Images: Key Fund


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