The Coronavirus Loan Scheme leaves many charities without access to emergency funding

30 March, 2020

The Treasury have confirmed that charities which receive half their income from trading activity will be eligible to apply for the ‘Coronavirus Business Interruption Loan Scheme’. This scheme which is delivered by the British Business Bank, provides support to SMEs and eligible charities that are experiencing financial difficulty as a result of the Coronavirus pandemic.


Sector leaders who had previously urged the government to set up a special fund for affected charities are now concerned that the current measures do not go far enough. Coronavirus will not only affect income from trading activity but also income from fundraising, grants and investments. The vast majority of charities which receive income from a variety of these sources will be excluded from the scheme.  Daniel Fluskey, head of policy at the Institute of Fundraising has stated that if more support is not given to charities, vulnerable individuals and communities will be the ones to suffer. In contrast, WCVA and Social Investment Cymru have provided emergency loan funding for all incorporated charities based in Wales that can demonstrate that Coronavirus has affected them financially.


The Charity Commission have though also issued some helpful guidance to Charities concerned as to how they can respond to the financial effects of the ongoing Coronavirus outbreak.  It notes that Charities will be eligible for grants to cover wages from HMRC for their workforce and can also consider taking certain practical steps such as pausing delivery of non-essential services and projects and can – given the unprecedented circumstances – explore dipping into reserves and, potentially, restricted funds, given the severity of the disruption being caused to both their operations and fundraising activities.


If your Charity is considering dipping into reserves or restricted funds you are strongly advised to seek advice if you can to ensure you do so in accordance with Charity Law and the latest guidance issued by the Commission. Our Charities Team would be happy to discuss these issues with you so you can hopefully find practical solutions to any short term financial issues that your Charity might be facing during what will no doubt be a challenging number of months for the Third Sector and society as a whole.