Loan Funding

This is a relatively new form of finance to the sector, and a diverse range of bodies now offer loans including:

• • Commercial high street lenders
• • National providers for charities e.g. Unity Trust Bank, Charity Bank
• • Community development lenders working on a regional basis e.g. Key Fund

Loans are a financial tool that can be used to ‘bridge gaps’ e.g. between grant payments or when a large sum of money is needed quickly for projects such as developing a building or providing funds for start-up costs for a new enterprise.

They are particularly useful to enable groups not to miss an opportunity whilst they are spending time on traditional forms of fundraising. Loans can be flexible (unlike grants which are tied to specific project outcomes) and loans encourage long term planning. Loans can also be used to help start-up contract or trading activities, e.g. covering the costs of development work, preparing tenders, training new staff, purchasing equipment or managing lead-in times between producing goods and services and receiving cash for sales.

When applying for loans you may need to check that your constitution or legal structure will allow you to take out a loan. Do research a wide range of loan providers and ensure you have the financial systems in place to demonstrate that you can budget and plan ahead.