A new scheme is providing financial support to community enterprises seeking to issue shares.
The Community Shares Fund underwrites community share issues, in a bid to provide investor confidence and facilitate access to capital – two obstacles often faced by community-owned enterprises.
Backed and funded by The Co-operative Enterprise Hub and Co-operative Loan Fund and operated by Co-operative and Community Finance, it has been set up with a revolving fund of £500,000.
Ian Rothwell, development manager for co-operative and community finance at the Co-operative, led a workshop on the fund at The Co-operative Enterprise Hub National Conference today (Wednesday).
He explained: ‘The fund has the flexibility built in to support groups in a number of ways, including finance, if needed, before the share issue is concluded, where assets, surveys or legal work has to be funded.’
After examining the viability of the business proposal, the fund will underwrite a community share issue by up to £50,000.
It allows enterprises to spread the cost of shares over a period of time for individuals, to encourage the widest possible community participation, and it offers equity purchase as an option, enabling a project to proceed even if it fails to reach its initial investment target.
The scheme has been developed with feedback from community-owned enterprises and co-operative development advisors.
Mr Rothwell said: ‘The reassurance provided by the scheme’s confidence in a project may mean that the share issue will reach its target without needing investment from the fund.
‘Our approach also ensures that community enterprises have access to providers of specialist support and advice on planning and community participation – steps critical to the success of a community share issue.’