Charity finance - loans, grants, blended finance

Whether you are looking to pay off debts, launch a new project, purchase a property, or increase your capacity to deliver more to your beneficiaries, you may need additional finance to increase your sustainability and achieve better results for the people you serve.

Grants, borrowing or a blend of these might allow you to move from your current position to a future goal more quickly. Whilst it could take a long time to gather enough money for a big project through traditional fundraising, repayable finance can allow you to get a project under way much more quickly.

Considering your options can be confusing. That’s why Richard Hunt, Head of Customer and Lending at CAF Bank, and Holger Westphely, formerly Acting Head of CAF Venturesome are here to help cut through the jargon and answer some key frequently asked questions.
Charity finance, where do I start?

Charity finance, where do I start?

Video transcript

[Richard speaking]

There’s a huge amount of jargon that comes around seeking finance, people talk about impact investing, about social finance, about bank loans, and many other areas. But essentially there’s three really key things that your financier will need to look at and understand. First one is: What are you trying to do? Are you trying to build something, are you trying to buy it, are you trying to invest in a programme? The second one is: What is the impact on your beneficiaries going to be? How will this make their lives better? And the third one is: What is the financial outcomes from the project? Will you need to subsidise it? Will it self-fund? Is it able to afford repayment of debt against it?

If you can get to these three areas then we can help cut through that jargon.

[Holger Speaking]

So while CAF Bank offers secured loans, usually on a property, CAF Venturesome can also offer unsecured loans and standby facilities which can be used at a later date, but secured in advance, for that bit of peace of mind. In certain circumstances we can offer blended finance, which is a financing package made up of a loan and a grant, which can be more affordable for small charities. You can approach either CAF Bank or CAF Venturesome and we will help you find the most suitable financing option for your organisation. If neither of us can help, we are very happy to suggest other options in the marketplace.

Secured and unsecured loans: What is the difference?

Video transcript

At a very basic level the difference between a secured and unsecured loan is that when you take a secured loan you give the person providing you finance some kind of asset that they can sell if you don’t keep up your repayments. It’s the classic house mortgage and the warning that we’re all used to. The more interesting question is why would you use a secured or an unsecured loan? An unsecured loan, such as those provided by CAF Venturesome, can be cheaper and quicker to put in place particularly for smaller sums where there are no costs around placing that security. For a larger amount, or for a cheaper rate, then a secured loan can offer you better value. What is really interesting is that within charities there is often a mix of these two forms of finance, where supporters or specialist providers like CAF Venturesome work with secured loan providers like CAF Bank to provide the proper finance for a project.

How do I choose the best route for my charity?

Video transcript

Now that you’ve decided what you’re going to do and you’ve agreed it with your board and other stakeholders you can tell us all about the level of finance you need, what you’re gong to use it for and how you plan to repay it We will help you work out the best option for you.

When is the best time to apply for charity finance?

Video transcript

[Richard speaking]

The best time to apply is a really interesting question because it depends on a number of factors. The first thing I would think about is how much control you have as a charity over the timeline. Is this something that has to be done at a specific date? Or is this something that actually you can control the progress of. Will you need to provide security or will there be other parts of the legal process that may slow things down?Or actually are we talking about quite a quick transaction? All of these factors will go into deciding when to have those first conversations. And it’s important that when you do, that you have enough information to hand that the conversation can be properly substantive; that you know what you’re looking for, and that you have got some ideas about how it might be structured.

[Holger speaking]

That’s right, whatever you do don’t wait until it’s too late, it is much better to have an informal early conversation when you’re not ready then to find that you’re running out of time.

Learn more about CAF Bank and CAF Venturesome

CAF Bank

CAF Bank offers secured loans designed for UK-incorporated charities and social purpose enterprises that have been running for at least three years. The loans start at £150,000, and go up to £5m (or up to £9m for social housing schemes).

Learn more about secured loans
Get in touch about a secured loan

CAF Venturesome

CAF Venturesome offers mostly unsecured loans, standby facilities and charity bonds, and blended finance packages from £25,000 to £400,000. As one of the first social investment funds in the UK, CAF Venturesome have made over 650 social investments totalling £56m since 2002.

Learn more about CAF Venturesome
Contact CAF Venturesome

CAF Bank loans are non-regulated products.

CAF Venturesome is a non-regulated product which provides financial support to charities through social investment.

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.

Modern Slavery Statement

Charities Aid Foundation © | Registered Charity Number 268369
25 Kings Hill Avenue, Kings Hill, West Malling, Kent ME19 4TA
10 St. Bride Street, London EC4A 4AD
Telephone: 03000 123 000