Third Sector Growth Fund

A new £30 million fund is being established to support small businesses within the third sector, helping them to grow as Scotland recovers from the impacts of coronavirus.

The fund will be designed to respond to a need for third sector organisations to access loans to help grow and explore new forms of social investment and finance. It will also help support the sector to meet the challenge of the pandemic and to become more sustainable in the long-term.

Communities Secretary Aileen Campbell said:

“We have worked hard to support the third sector throughout the pandemic. This new fund will focus on those organisations with the potential to grow, contributing to jobs and making a positive contribution to our communities and the wellbeing economy.  It also goes some way towards our commitment to explore other strands of social investment, including capital loans, to build upon Scotland’s world leading position in social enterprise.

“The fund will help this sector to ensure that it not only supports our communities, but is at the very forefront of our recovery, leading our communities and our country through recovery.”

Yvonne Greeves Board member at Firstport & Chair of Catalyst Fund said:

“The Catalyst Fund is an exciting new addition to the social investment arena in Scotland. The patient, revenue-based repayment model is well placed to help certain social enterprises obtain the capital they need to start-up and grow, whilst offering them a more flexible repayment approach to match their ambitions.

We welcome the support from the Scottish Government in backing this innovative model and we look forward to supporting social enterprises with potential for high-growth to enter new markets and deliver significant social impact."

Background

The Third Sector Growth Fund will build on more than £1 billion which has been invested in communities since the start of the pandemic, which includes a recent commitment to a further £14 million to allow the Communities and Third Sector Recovery Programme to continue to the end of June.

The Third Sector Growth Fund will have three elements:

• The Social Catalyst fund, which totals £15 million, will help growing organisations which are not able to access finance through standard loans, offering investment which can be repaid based on turnover, rather than growing interest rates. This would suit small businesses and start-ups whose income is variable.
• The Circular Economy Fund will support activity which builds on sustainability of social enterprises and enables growth through investment loans. Together with The Long Term Third Sector Finance Fund which will offer loans for social enterprises and Third Sector organisations over a period of 18-24 months. a total of £10 million will be available.
• The Social Impact Venture Portfolio will offer investments of equity into mission-driven businesses, encouraging organisations to adopt a social enterprise model. This is worth £5 million.

The delivery partners are The Social Impact Venture Portfolio and Social Investment Scotland a social enterprise and a charity offering loan funding and business support across the sector to make a positive impact on lives, society and the environment.

Social Investment Scotland will manage The Circular Economy Social Enterprise Fund and Long Term Third Sector Finance Fund.

The Impact Investment Partnership Scotland (IIPS), an entity owned equally by Firstport and Social Enterprise Scotland (SES), will manage the Social Catalyst Fund.  

Access to the funds will be by application. Further details of the funds and how to apply will be published on the partner organisations websites later this Spring.