Loans could ease pressure at touring companies

Touring companies could soon make use of arts council loans to ease short-term cash-flow pressures, if the recommendations of a new report are taken up. The report, commissioned by UK Theatre, urges the UK’s arts councils to seek permission from their respective finance ministries to use both grant-in-aid and Lottery funds for short-term loans, saying this would shield touring companies from the costs associated with higher-interest loans from finance houses.

Arts Council England cannot currently deploy grant-in-aid funds as loans, and whilst it is permitted to do so with Lottery funds, only does so in exceptional circumstances. But a precedent has been set by Creative England, which has gained permission from the DCMS to provide loans. It runs a scheme offering three-year, interest free loans on the condition that 50% is raised in match funding from other sources.

In the report, which explores new financial models for theatre touring, authors Graham Devlin and Alan Dix say loans could help ease cash-flow pressures on a short-term basis, “when there is confidence that a shortfall will be rectified in the near future,” such as at the beginning of tours when capital production costs are incurred before box-office receipts are realised. Loans could also provide longer-term security for a company, venue or network involved in a business development initiative.

Another recommendation is for the arts councils to consider setting up investment funds, with the aim of investing in high-quality, potentially profitable theatre shows which could realise a financial return. Such a scheme would allow expenditure to be “recycled when the project is over” and in the case of very successful shows – if the sum returned is more than the original investment – the profits could be used to develop further artistic work.