Santander backs £30m social investment fund

A new £30 million loan fund went live today – with £13.5m backing from banking group Santander.

The fund, operated by social lender Social and Sustainable Capital (SASC), is open only to charities and offers between £250,000 and £3m at interest rates between 6% and 12%.

On top of Santander's investment, Big Society Capital will provide £15m while Social Investment Business has provided £1.5m.

While Santander see the investment as purely commercial, Nat Sloane, chair of SASC, said it proved major lenders were investing in the sector.

It is the first time a major bank has made a direct social investment though other banks have lent to the sector previously.

He added: “What excites me most about this is the mixture of philanthropic and commercial capital,” Sloane said.

“Santander has come in on the same basis it would make an investment in a mainstream fund.”

Other investors are still being sought for the fund in order to grow the amount it has to lend.

Marcellino Castrillo, managing director of SME banking at Santander said: “Banks don’t know about this sector and don’t understand it so they’re reluctant to lend,” he said. “As a bank this teaches us how we should approach the sector.”