Charity Bank - Have you Thought about Loans?
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a different bank for people who want a different world Have you thought about Loans? Chapman Harrison Regional Manager – South West Charity Bank 27 th November 2013
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Transcript of Charity Bank - Have you Thought about Loans?
a different bank for people who want a different world
Have you thought about Loans?
Chapman HarrisonRegional Manager – South West
Charity Bank
27th November 2013
a different bank for people who want a different world
Introduction
Charity Bank Investment Readiness Types of finance – logic path Examples A cautionary note Time for your questions
a different bank for people who want a different world
Charity Bank
“I do not have very much money to invest or to give and Charity Bank enables me to contribute to good projects despite this difficulty.”
Quote from a Charity Bank depositor
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What is Charity Bank?
• A Bank that has a social mission• Supporting social purpose organisations• Helping deliver social impact and change
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How do we achieve our Mission?
• We provide affordable loan finance to charitable / social purpose organisations that are usually unable to borrow elsewhere
• Our work is funded by individuals and organisations that use their savings as a positive source for change
• They get a financial return on their money and a social return from knowing what they have helped fund
• Every pound deposited is used to provide loans to charities, community and voluntary groups and social enterprises
• We work with a variety of partners to create alternative and creative funding solutions
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Investment Readiness
A state of preparedness to obtain / receive external investment. Track record, Structure, Governance, Management capability, Business Plan, Ability to produce timely financial reports and Forecasts. Ability to repay.
Is taking external investment appropriate?
If I am interested, where can I go to find out more?
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What is investment readiness
Spectrum of F
unding
Fundraising/ Grants
1:1
Grant/LoanFund
1:2
Grant/LoanFund
Social
Finance
Commercial
Finance
Investment
Readiness
Programme
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How Can You Make Yourself Investment Ready?
• Recruit Trustees with necessary skills• You need a continuing income stream to be
able to repay a Loan• Employ / Take advice from professional firms:
Accountants, Solicitors, Marketing. Some may work on a pro bono basis
• Talk to other organisations doing similar things• Big Lottery seeking to launch an Investment
Readiness Fund
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Why use loan finance ?
• Purchase / Develop a building• Refurbish a building• Bridge receipt of a grant or other income• Working capital facility• Acquisition of equipment• ‘Last brick’ funding
- One, or any mix of the above
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What sort of things have Charity Bank funded?
• Hostels for the Homeless with drug / alcohol issues• Refurbishment of Almshouses• Building new Village Halls• Buying a building to use as a Community Centre• Development of Affordable Homes• Respite Care Homes• Supported Living Homes• Pre-School / Nursery facilities• New facilities for Sports Clubs• Office space with additional space available for letting to
give income stream
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Loan Finance – the benefits
• Enables a project to be delivered NOW providing services to
beneficiaries AND generating income• Can avoid potential increase in costs (building cost inflation)• Unable to obtain grant funding• Lending against pledges/retrospective grants
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Loan Finance – the small print
• Minimum £50,000, Maximum £1M +• Loan term up to 25 years• Secured and Unsecured (max 5 years)• Secured on property or other assets• Loan to value (normally 70% max)• Borrowing rate – typically 6.50% Secured /
7.50% Unsecured• Fees: 1.00% Arrangement Fee, plus you pay
own Legals / Valuation Costs etc.• Covenants: What we both expect to see
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Points to be aware of
Other lenders may demand Trustee guarantees (Charity Bank does not)
Pre-drawdown conditions (e.g. Planning Permissions)
On-going financial covenants (e,g. Debt Service Cover)
On-going information requirements (Quarterly Accounts / copy bank statements)
Possible Breakage costs / early repayment penalties on your existing Loan
Events of default and consequences of default
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Charity Bank Borrower: Half Moon Young People’s Theatre
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Thank you.
For further information please contact:
Chapman Harrison
07795 107173
