This amounts to more than double over the next year than borrowed during 2016, according to the results of a survey commissioned by innovation foundation Nesta. The £309 million figure over five years amounts to £62 million per year and highlights an increase in demand since 2016, when 15% of the survey’s respondents used repayable finance, receiving £29 million in repayable finance between them.
According to the report, while repayable finance is currently only used by a small proportion of organisations (15% of respondents), they are optimistic about the benefits, with an average of 57% believing they will see a higher income in the next five years.
While organisations that have sought repayable finance tend to be based in London according to Nesta, it expects 54% of future demand to come from outside the capital. Over twenty organisations since 2015 for example have received or are set to receive Arts Impact Fund loans, which offers repayable finance between £150,000 and £600,000 to arts organisations in England. The £7m fund was launched by Nesta, Bank of America Merill Lynch and Esmée Fairbairn Foundation, with support from Arts Council England and Calouste Gulbenkian Foundation.
There are still some concerns around taking out repayable finance, with the highest concerns relating to repayments, particularly in generating the income to repay the finance received (57%) and the terms of the contract (49%). However, Nesta found that those who had previously taken it out reported a positive experience, and were far less likely to cite barriers.
Fran Sanderson, Director of Arts Programmes and Investments at Nesta, said:
“We’ve had a real sense through the investment period of the Arts Impact Fund that there would be strong and increasing demand for this kind of repayable finance. It felt as though organisations in the sector were warming up to the idea, and seeing the potential benefits of this type of finance through our and other case studies. We wanted to back this up with some data, so commissioned the report, and are happy to see that this supports the case for raising and deploying more funds into the sector.
“We are learning all the time about how to make investments in as constructive a way as possible, including working closely with funding partners such as Arts Council, Esmée Fairbairn, Bank of America and other social investors we’ve worked with, such as our collaboration with Big Issue Invest and Triodos on getting Village Underground’s Hackney Arts Centre off the ground.”
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