Theatres and other arts buildings will be eligible for the fund, though the interest rates and term length of loans could deter many.
The new-look National Lottery Heritage Fund (NLHF) has established a major new loan programme to support the acquisition and maintenance of historic buildings.
The £7m Heritage Impact Fund will provide charities, social enterprises and community businesses – which could include venue operators – with loans to help them deliver “positive economic and social impact” through the re-use of heritage buildings.
But the Theatres Trust, the body tasked with defending the UK’s theatre heritage, has expressed concerns about the viability of the fund for the theatre industry in particular, given limited project time frames and the predicted size of the interest rates.
The model is the result of a partnership between Historic England, Historic Environment Scotland, Cadw and Rathbone Greenbank Investments.
Loans of between £25k and £500k will be available for projects, with a headline interest rate of 6% and a maximum three-year term. A spokesperson said that the term could be extended in exceptional circumstances, and incentivised rates for projects that deliver significant economic or social impact could be introduced.
The programme will also offer expert support, advice and mentoring to applicants to support sustainable business change.
Explaining the developments, which make a break from NLHF’s role to date as a grant funder, CEO Ros Kerslake said there was a “growing appetite” for loans in order to “diversify income, strengthen business models and reduce reliance on grants”.
She also said the partnership would make National Lottery support “work harder” and “deliver positive and lasting change for people and communities, now and in the future”.
The fund aims particularly to support organisations with a clear social mission to deliver demonstrable benefits to local economies and people – such as job creation, training and volunteering opportunities, and the restoration and re-use of heritage buildings for commercial and community use.
Jon Morgan, Director of the Theatres Trust, welcomed the scheme as another way to support the UK’s stock of theatre buildings. He said the “worrying decline” in capital grants in recent years, combined with increasing demand for support, meant theatres and arts organisations are increasingly open to mixed funding models that include loans and other forms of social investment.
But he warned that loan funding is only viable when there is a business plan in place that will generate sufficient returns to repay the loan with interest, and that the scheme’s 6% interest rates may limit which theatres can apply.
“The scale of investment required in heritage theatres and the gap between the potential commercial return and the cost – the conservation deficit – means that for most theatre projects this funding would not be appropriate,” he said.
“It is targeted at heritage social enterprises who can clearly demonstrate a return from a relatively modest investment. Some larger or more established theatres may be able to make the case for much needed front of house refurbishments where these could be repaid through increased ancillary income and they could benefit from the business support that accompanies these loans.
“Loans should never be seen as a replacement to grant funding but they may allow smaller projects to proceed without theatres amassing large reserves.”
The Theatres Trust’s annual risk register tracks the number of at-risk theatre buildings in the UK. In 2019 the Trust added two new venues to the register – in London and North West Wales – and called for more support between theatre owners, operators, local authorities and community groups to protect the venues.