Government-Backed EFG Scheme - Funding Future Growth
The recession has affected us all and the charity sector
has definitely felt the squeeze. Philip Hall of RBS discusses the
EFG scheme as a possible funding solution.
The Charity Commission's latest economic survey of
charities, published in March 2009, showed that just over half of
the respondents have been affected by the recession, with 30%
suffering from a reduction in income. One third of charities have
put measures in place to combat the effects of the recession,
ranging from additional fundraising to cutting costs*.
For all organisations, including charities, when working capital
becomes – or may become – tight, it's more
important than ever to engage with your bank. Despite popular
belief, there is funding out there for viable charities: it's a
case of making the most of your bank, finding out what funding is
accessible for you and ensuring that you can demonstrate that
borrowings can be repaid.
The Government-backed Enterprise Finance Guarantee (EFG) scheme
was launched earlier this year and is one example of possible
funding. The scheme aims to ensure that smaller businesses,
including charities, with an annual turnover of up to £25m,
have the necessary working capital or investment finance in place
to help them through the difficult economic climate. Under the EFG
scheme, the Government will guarantee 75% of any loans made.
Despite press comment, this is a successful scheme – RBS,
at the time of writing, currently has over £200m of EFG loans
already agreed or in the pipeline.
By speaking with your bank's relationship manager,
you'll be able to find out what solutions are available to you.
Having worked in this sector for some time, we find that many
charities are reluctant to take on debt but your relationship
manager is there to guide you and offer the funding solutions that
fit your specific needs. This can often be more than a simple
overdraft or loan and will allow you to continue to provide the
services and good work you currently do, even if income falls.
For instance, RBS recently backed the charity and social
enterprise, Charity Technology Trust (CTT) with funding from the
EFG scheme; this provides a good example of how the scheme can
help.
Based in London Bridge, CTT was launched seven years' ago
and provides charities with a range of services, such as
e-communications and payments services, designed to increase
efficiency in the core areas of activity: fundraising, campaigns,
communications, finance and IT. Over the past...
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