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Organisations applying to DCMS' £270m repayable finance scheme can ask for money to employ freelancers when government support ends. 

Organisations can take out loans to support freelance artists. But will they?

Peter Black

Loans given under a new £270m scheme can be used to pay freelancers, Arts Council England (ACE) says.

DCMS' repayable finance scheme for arts and cultural organisations facing financial distress due to the coronavirus, part of a £1.57bn rescue fund for the sector, opens for applications at noon on Friday (21 August).

Loans of at least £3m are available for a wide variety of purposes from reopening costs to building maintenace, developing new business plans and staff salaries or "proportionate redundancy payouts".

Critically, guidance from ACE, which will monitor repayments on DCMS' behalf, says loans can be also given for "freelance employment" once the Government's Self-Employment Income Support Scheme (SEISS) ends on 31 August.


This could allow organisations that are willing to take on large debts to provide ongoing work opportunities for self-employed artists.

However, decisions on the loans won't be made until 19 October, leaving most creative industries freelancers without income for several weeks at the least.

An ACE spokesperson clarified that loans to pay freelancers are available "as long as [it's] within the organisation's cost effective plans to achieve financial sustainability".

Would-be applicants to the scheme are warned that not every request will be fulfilled and "entering into negotiations is not a guarantee that a loan will be made".

"Organisations should only propose to deliver activities that are good value for money with social distancing in place and that do not entail significant financial risk," ACE's guidance says.

Terms and conditions

Loan applicants will be judged on how well they meet three criteria: financial resilience, cultural significance, and the diversity of their audiences and workforce. 

But if more applications are fielded than it's possible to fund - an expected scenario - a fourth set of 'balancing' criteria will come into play.

These criteria aim to ensure funding reaches a range of organisations in different disciplines and geographic areas, and that the loans increase access and participation in the arts. Organisations' "economic impact" will also be considered.

Loans will have a 2% interest rate and should be repaid "as early as feasible and prudent and in any event not longer than a 20 year maturity," ACE's guidance says. 

However, there will be an initial four-year interest and repayment holiday in most cases, during which time interest will accrue on a six-monthly basis.

In some exceptional cases, repayment schemes for charities will be based on their commercial income instead.

Like the Culture Recovery Fund Grants programme, successful applicants will be expected to freeze or cut salaries for their senior staff.

No double dipping

Organisations that apply for repayable finance cannot also apply to its sister scheme.

This means that applicants that miss out on a loan - or don't receive as much as they hoped - could be left stranded as the deadline for applications for grants will have passed.

ACE says it may take steps to secure the loans. The security will depend on individual organisations' assets and finances, but could include any property they own.

"If you have existing borrowing, when we confirm a loan, we may expect the government investment to take the senior position in terms of payment and security," ACE's guidance says.

As the Accounting Officer for the repayable finance programme, DCMS will lose out if any loans are not fully repaid.