Loans for charities
A loan could help your charity thrive, but it’s important to find the right fit. Here’s an overview of the different types of loan.
Standard term loans
Standard term loans can be secured or unsecured, and are generally used for capital projects – like building a property. Anything up to £5m is borrowed and then repaid anywhere between two and 25 years. Interest rates are usually around 2-5%* and linked to the Bank of England base rate, or may be fixed for a number of years.
What is the difference between secured and unsecured loans?
An unsecured loan isn’t provided against any sort of collateral. It means that the amount which can be lent is often less and the interest rate may be more. However it can be a cheaper and more suitable alternative for smaller amounts.
Junior loans
This type of loan is where one lender offers part of the money – and another lends the remaining amount. The riskier portion of the loan comes with a higher interest rate. Junior loans can be complex, and only tend to appear on larger capital deals.
Quasi-equity
Start-ups or organisations looking to expand often choose this kind of financing. The idea is to pay back the loan through growth that’s sufficient to generate regular surpluses. How this looks will differ from one organisation to the next, but could include a share in the rise of the value of a building.