A SIMPLE GUIDE TO CHARITY FINANCE

The right financial support for your charity could help you do more for the people and communities who turn to you. Explore the options which could help you achieve your goals.

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.

Overdrafts for charities

If you need short-term support, an arranged overdraft could make more sense than a loan.

Unsecured overdraft

This is similar to an overdraft on a personal current account. The interest rate and amount available depend on how stable your organisation’s operations are, the strength of your balance sheet, your annual income, and level of financial surplus.

Secured overdraft

This involves an asset such as property being tied to the overdraft. If any problems arise in making loan repayments, the asset will be at risk and used as a secondary source to repay the loan. Interest rates are lower than those on an unsecured overdraft, and more money can be borrowed. However, as the amount being borrowed can fluctuate within an agreed limit, the rate is usually higher than it is for a secured loan.

Support for whatever comes your way

Whether you need to bridge a gap in funding or strengthen your charity’s day-to-day finances, a loan or overdraft could get you where you need to be. Learn more about borrowing, or take a look at some of the charities we’ve supported.

Could a loan help your charity thrive?


How repayable finance could help you to deliver your charity’s future plans.

Loan finance - Questions to consider


Our handy checklist will help you decide if a loan could be right for your charity.

Loan finance in action


Discover the stories behind the causes and projects we’ve supported.

* Interest rates provided on this page are indicative and for guidance only. Actual loan interest rates will be dependent upon the prevailing Bank of England base rate (the Bank rate).

 

 

CAF Bank loans are non-regulated products.

Loan applications subject to credit assessment. Security will be required.

Charity assets may be at risk if you do not keep up with the repayments for a mortgage, loan or any other debt secured on them.

If you're thinking of consolidating existing borrowing, you should be aware that you may be extending the term of the debt and increasing the total amount you pay.

CAF Bank Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register number: 204451).

CAF Bank Limited Registered office is 25 Kings Hill Avenue, Kings Hill, West Malling, Kent ME19 4JQ. Registered in England and Wales under number 1837656.


Charities Aid Foundation © | Registered Charity Number 268369
25 Kings Hill Avenue, Kings Hill, West Malling, Kent ME19 4TA
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