Affordable Credit Fund: Expressions of interest invited by 28 January
Social Investment Scotland (SIS) are inviting expressions of interest from eligible affordable credit providers for the Affordable Credit Fund, backed by Carnegie UK Trust and the Scottish Government.
The aim of the Fund is to support the development and growth of affordable personal credit, through not for profit lenders by the availability of flexible loan capital.
The Fund will seek out providers operating within the most disadvantaged communities of place and interest in Scotland; ensuring that affordable credit provision is not stifled by a lack of access to flexible loan capital.
The Fund initially had a value of £2m and £1m remains for investment.
Who is eligible for the fund?
The primary eligibility criteria relate to the legal form of the proposed borrowers from the Fund.
We are looking for:
• Companies Limited by Guarantee
• Community Benefit Societies (e.g. an Industrial and Provident Society)
• Credit Unions
• Scottish Charitable Incorporated Organisations (SCIOs)
• Community Interest Companies (CICs)
The overriding principle when assessing eligibility should be that the organisation has in place an appropriate “asset lock” in place demonstrated via two main characteristics:
1. That profits earned are reinvested within the organisation or in the beneficiary community: they are not distributed to owners, directors or shareholders (except where shares are wholly owned by a charitable organisation or CICs limited by shares where a maximum aggregate cap of 35% is allowable by the Regulator);
2. That in the event of dissolution, the assets of the organisation, following repayment of outstanding debts, are reinvested either in another organisation with similar aims or objectives or some other alternative that avoids distribution to owners, directors or shareholders.
What if I do not meet these criteria?
Please have a conversation with us before submitting an expression of interest. If you are invited to submit an EOI then this might still not mean that your application is going to be considered and would be subject to further consideration by the investors in the ACF.
What are the terms of the investment?
Investment from the Fund is intended to be as flexible as possible, and a bespoke investment package will be developed in partnership with you. However, as a guide, investments will have the following terms:
- Amount: Minimum – £200,000 Maximum – £1,000,000
- Arrangement Fee: 1% of total loan amount. This fee is payable regardless of loan amount or interest rate charged. We do not envisage that there will be any other SIS fees charged as part of the investment process, although you may have your own legal fees to pay.
- Interest Rate Range: Up to 6% fixed, charged daily and payable monthly/quarterly/annually as appropriate. The interest rate will be recommended by the Investment Manager based on a range of considerations including security, track record, governance arrangements, sustainability, and social impact.
- Term: Minimum investment period of 5 years. Maximum period not to extend beyond 30th December 2027.
- Repayment: Bullet repayment at the end of the agreed term or amortisation over the period of the loan. Capital holidays will also be considered in the initial 3 years of the facility.
- Security: Security for the loans should be taken where available, however, funding can be provided on an unsecured basis.