A £3.7 million investment fund for the arts has been created to address a “gap in the market” for small-scale loans.
The fund, created by Nesta, will focus on organisations seeking funding to carry out work that will benefit their community and wider society.
Arts and cultural organisations in England will be able to apply for repayable loans of between £25,000 and £150,000 as part of the Cultural Impact Development Fund, which is intended to help companies “achieve social impact and improve their resilience”.
Repayment terms will be of one to five years, and interest rates will range between 5.5% and 8.5%.
Nesta said the fund had been designed to offer financial incentives for organisations considering social and community-led projects – reduced interest rates could be offered for those that prove they have brought about change in their community.
The fund has been created in response to a recent survey, carried out by Nesta, which highlighted a demand for repayable finance within the arts sector. Nesta said demand for small-scale loans was particularly strong.
Fran Sanderson, director of arts and cultural investments and programmes at Nesta, said it hoped the loans would help smaller organisations all over the country boost revenue and increase their impact.
“We believe fervently in the power of arts, culture and creativity to engage and empower even the most marginalised in society, and the passion of organisations working in the sector to drive positive change for individuals, communities and wider society,” she added.
The programme is managed by Nesta and funded by Access, a foundation for social investment, with partners the Big Lottery Fund and Big Society Capital.
It follows a similar scheme, the Arts Impact Fund, which has provided larger loans, of between £150,000 and £600,000, over the past three years.
Sanderson continued: “We are really excited to have this opportunity to partner with Access to address the gap in the market for smaller loans that we could clearly see whilst managing the Arts Impact Fund.”