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Bank Lending

Charity borrowing on the increase, suggesting sector’s confidence growing

By CreditMan Friday, May 16, 2014

Charity Bank – the bank that takes savings from individuals and lends solely to social sector organisations – has approved 36% more in loans by value from January to April 2014 than over the same period last year, up from around £4.2m to over £5.7m.

The Bank expects demand to continue increasing and, following Big Society Capital’s major investment in the Bank recently, is looking to increase the amount it lends from its 2013 level of around £55m to around £250m by December 2018.

Not only are loan approvals up, but enquiries and applications have increased as well. Loan enquiries for January to April 2014 inclusive have risen 28.1% in volume compared with the same period in 2013 and applications have risen 51.4%.

Charity Bank’s Head of Banking, Carolyn Sims says, “Confidence to borrow reflects a confidence to grow. An appetite for sound borrowing is more often than not an indicator of good health for an organisation, and a loan can be the key to unlocking further monies. In our experience, 41% of the organisations to whom Charity Bank has lent money have been able to leverage additional funds from sources such as local trusts.

“We believe that this is just the beginning of a new, sustained surge in demand for borrowing, and the Bank is gearing up to meet it. Our goal is to increase our lending to the sector substantially over the next four years as well as to increase deposits from savers to help meet the demand.”

As well as increasing the funds it has available to lend, Charity Bank provides free consultations with its regional lending managers for potential borrowers to explore the suitability of loan finance. If a loan is not the best option, Charity Bank can often refer the organisation to other providers that might be able to provide a more suitable solution. To request a free consultation, organisations can visit: www.charitybank.org/charity-loans

Charity Bank is also is offering a series of free half-day seminars in June and July to help social sector organisations prepare for investment and growth. The seminars, called The Road to Growth, are taking place in London, Nottingham and Leeds. Aimed at trustees, CEOs and finance managers from charities and other social sector organisation that are seeking to sustain and grow their impact, these seminars will consist of small and focused round-table workshops with experts and practitioners from social sector organisations. To sign up or for more details, visit www.charitybank.org/road-to-growth