Banknotes

Charity borrowing on the increase, showing confidence in sector

By: Information Daily Staff Writer
Published: Thursday, May 15, 2014 - 13:17 GMT Jump to Comments

Charity borrowing is on the increase, suggesting the sector’s confidence is growing, a charity bank reveals.

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

The bank reports that loan approvals are up, as are enquiries and applications to the bank. They are forecasting continuous demand following Big Society Capital’s major investment in the bank recently, and are looking to increase the amount it lends from its 2013 level of £55 million, to around £250 million by December 2018.

Big Society Capital made its largest single investment of up to £14.5 million of ordinary shares in the bank, in three successive trenches between 2014 and 2016.

Loan enquiries for January to April 2014 have risen 28.1 per cent in volume compared with the same period in 2013, and applications have risen by 51.4 per cent.

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 per cent 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”.

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