A pioneering deal has been signed to finance the construction of a new multi-million dollar training facility that will help 250 homeless youth put their lives on track each year.
The deal has been brokered by NAB and Social Ventures Australia (SVA) and will loan $2.5 million to the social enterprise STREAT to finance the construction of a training facility and retail outlet in Melbourne’s inner-north.
STREAT is a social enterprise based in Melbourne that tackles youth disadvantage and homelessness by providing the life-skills, support networks, work experience and training young people require to kick-start their lives and a career in hospitality.
This deal is structured with NAB and SVA providing $2.5 million to fund the construction of the new facility with no interest payments required during construction. The value of the property will provide security during the construction phase.
Once the construction is complete, NAB and its partners will sell the debt to investors who are interested in tangible social, financial and environmental returns, thereby providing a new impact investment opportunity in the developing Australian market.
NAB’s Victorian Head of Government, Education and Community Banking, Corinne Proske said that the deal is further evidence of the bank’s commitment to financing innovative approaches to tackling social problems.
“We believe that what’s good for communities is good for the economy and makes business sense. By helping STREAT scale-up their activities, we are addressing a serious issue in Australia – youth homelessness – while supporting a strong and viable business to grow,” Ms Proske said.
“We want to become the bank of choice for social enterprises in Australia and are working hard to develop deals such as this that provide tailored financing solutions to this growth sector.”
STREAT’s five Melbourne based cafes, catering and coffee roasting businesses train 150 young people a year and provide the social enterprise with an income. The new training facility will allow them to increase this to 250 people and the potential to expand the program to other states.
STREAT’s CEO Rebecca Scott said that banks need to develop unique approaches to help the social enterprise sector grow and increase their social impact.
“Social enterprises aren’t traditional businesses and so taking a traditional approach to financing them doesn’t work. Without NAB and SVA acknowledging this we wouldn’t be able to set some aggressive targets that will make a huge impact in tackling youth homelessness,” Ms Scott said.
Ian Learmonth, Executive Director of Impact Investing at SVA said the deal highlights the growth of the social enterprise sector in Australia with STREAT successfully attracting NAB’s support.
“Over the past 10 years we have worked tirelessly to develop the social enterprise market in Australia, and to pioneer financing approaches that support great programs to grow and scale,” Mr Learmonth said.
“Having a mainstream bank support this deal signifies how far the market has come, and the momentum that’s building for impact investing. We look forward to continuing to work closely with enterprises, government and the corporate sector to ensure that the market continues to develop and supports maximum social impact.”
Construction will begin in May.
Last week, the partnership between STREAT, NAB and SVA won the Social Enterprise Investment category of the Social Enterprise Awards, a national competition that recognises outstanding work in the growing social enterprise sector.