With lockdown starting to loosen, and businesses tiptoeing towards trading more, Business Development Manager Tim Coomer has taken a w wide-ranging view and looked back over a whirlwind three months – what have we done through lockdown, and what do we plan to do next?
Firstly, I think we need to say we have been lucky compared with many others! As an organisation we are small and agile so have been able to cope quite well – two members of the co-op already worked from home so the only real change was the lack of getting out and about, as we do cover the whole of the UK including Northern Ireland (occasionally!). There have been some extra work/life/home balance challenges – kids at home for Tim, occasional cat on Zoom calls for Ian, and some initial glitches setting up computer software for the Bristol Office based duo, Anne and Alain but we have adapted pretty well to the lockdown and working totally from home.
The first few months of lockdown saw us protecting and supporting our existing borrowers, working closely with them to help them through those early, frightening days. It was all so unknown then. We approved Capital payment holidays for over 50% of our portfolio including the Co-op Loan Fund portfolio we manage. At that time we felt it important to be in close contact with all our borrowers and we continue to do so.
Through our website, social media and newsletter, we also provided updates on the range of schemes and opportunities that have come along throughout the crisis from a range of government sources, grant providers and partners. The Co-op & Community Finance Group of companies and Co-op Loan fund lend to around 80 Co-ops of all shapes and sizes and we have in the region of £3 million out on loan at any one time, so there was a lot of communicating to do!
Sadly, one company has gone into voluntary administration but the silver lining of that news, if we can find one, is that it’s just been that one business – we know how scared many of our clients were at the beginning and we’re really glad that so many have been able to keep going, in one way or another.
Our recent positive lending and other stories are here and the Co-op Loan fund here. The Plunkett Foundation have also published some feel good stories about the range of community initiatives that have come out of the crisis and we’ve been happy to share these – the surge of community feeling has been wonderful to observe.
Overall, we haven’t seen that much additional demand for loan finance through lockdown. It’s felt like people and organisations have hit pause on big decision making, and who can blame them? Government interventions have so far been quite successful for those that have needed emergency finance and for many co-ops taking on extra debt with such uncertainty has been a worry. The British Business Bank is the access route for loan/ debt finance which is supported by the government, underwriting/guaranteeing loans for the lenders, and paying interest for the first 12 months in most cases.
We looked at being a lender on the Coronavirus Business Interruption Loan Scheme or CBILS but the market was moving very quickly. It would have taken time to get approved and we were concerned about the number of ineligible enquiries we might have seen – as a specialist lender to the co-op and community business sectors only, this could have been overwhelming for our small team.
Bounce Back Loans were and are the game changer for many co-ops and SME’s in general with good terms of up-to £50k up to six years to repay and no payments in the first 12 months. We were unable to be a lender on this programme as lenders are required to have £10m to lend, which excludes us and most other social and community lenders. Co-op Bank is an approved provider. Its not been a panacea for all though, there have been issues accessing loan finance for some co-ops and community businesses, especially among co-ops who don’t have bank accounts with the mainstream banks. Typically you have to open a new bank account before you can access the finance.
The Resilience and Recovery Loan Fund created in development with the social investment/ responsible finance sector has supported a few larger Social Enterprises but the minimum £100,000 limit on loan finance hasn’t met what most of our borrowers are looking for.
We are really keen to know if co-ops have struggled to access the finance they need from these schemes and understand how we can help.
About a third of our current portfolio are Community Pubs and are obviously at high risk. As we write, Pubs are beginning to get advice on reopening from July, but with social distancing measures still in place, how it will all work out in practice is unknown. We continue as a partner in the More than a Pub programme along with the Plunkett Foundation who have been able to provide a host of support to the still burgeoning Community Pub sector. Many of these pubs have also received C-19 Emergency Trading Income Support Scheme from Power to Change along with a range of other community businesses. These grants are to help pay ongoing costs but also to restock supplies, purchase PPE equipment, screens, layout changes, deep cleaning, etc…
We also manage the Community Shares ICOF Ltd which is a small fund that invests discreetly into community share issues. The fund is only small and we have recently prepared a proposal ‘Fresh Start’ which has been sent to a range of potential funders asking for money to enable CSI to provide small injections of equity investment to help co-op societies rebuild. If you represent a larger co-op society foundation or trust that is interested in providing patient funds for us to invest please do get in touch.
As we call in the Summer we are now very much looking forward to the recovery and rebuild of the sector and see the Autumn months as critical for many of the co-ops and community businesses we support. As staff come off furlough and enterprises try to get back to some kind of business as usual, our borrowers will experience further testing times. However, despite the turbulent few months, CCF and Co-op Loan Fund continue to be here to support our borrowers get back to business, helping rework loan terms as required and ready to lend more to help our borrowers rebuild and grow. Unlike other lenders, we are lucky to have our own funds available to lend that have been recycled many times in our history and we plan to relaunch our ICC Fund later in the year, raising new money to on lend. Please get in touch If you would like to invest either as an individual or society.
We feel confident in the future for co-ops and well placed to provide finance to a new swathe of co-ops and community businesses that will emerge from this crisis and join us in a better way of doing business and building back better. We will also be looking at new blended funds (debt and grant) opportunities likely to be available in the Autumn for our co-op customers, though these schemes are still in the design phase, so we need to be patient but watch this space and as always, do get in touch if we can help in the meantime.
This article is adapted from an interview with Coop News