Collaborating on a project

Webinar

STABILISE AND GROW

Learn about loans and borrowing for charities and social enterprises.

Watch the webinar

This webinar took place on Wednesday 7th October | 2.00-3.00pm

In this challenging year we're here to support your charity or social enterprise to stabilise and grow. Has your organisation got big plans for the future? Are you thinking about buying a property or starting a new enterprise? Do you need more than just money to support your plans?

Many social organisations have borrowed money to fund growth projects. Especially as it can help to speed up plans that benefit your beneficiaries. But it’s an option that's often dismissed too soon. 

Watch this webinar to understand the borrowing options and non-financial support available to social organisations.

  • Learn about the different types of repayable finance (borrowing) available
  • Hear from two charitable organisations that have used a loan to transform their operations
  • Discover how CAF Venturesome and CAF Bank provide charities and social purpose organisations with loan finance and support to build resilience

Slides and resources

Access the slides featured in the presentation and find out more about the types of loans available below:

Your questions about borrowing answered

Attendees had the opportunity to put questions about borrowing to our experts. We had a fantastic response during the Q&A and couldn't answer every question. We've collated the questions and added answers below.

 

Q. What's the difference between a secured and an unsecured loan?

A. Secured means backed by an asset (normally a building) that can be sold in the event of default to repay the loan.  Unsecured means that the loan is not backed by anything. It is higher risk as in the event of default we would have to write-off the loan.


Q. Are secured loans cheaper?

A. Yes, because unsecured loans take more risk.  If you default on a secured loan, we can take your security in lieu of payment; if you default on an unsecured loan, we have to write-off the debt.


Q. What is your commercial mortgage interest rate? What term is offered, and are mortgage loans always on the capital repayment basis?  If the borrowing is to purchase a property for an endowment fund, with the income generated by the building being income in the unrestricted fund, what is the accounting for the capital repayments made out of the income?

A. The commercial mortgage rate is dependent on the individual circumstances surrounding the loan but can be expected to be in the range of 2% to 3% above base rate. CAF Bank terms can be up to 25 years, depending on amount and profile. They will normally be on a capital repayment basis, although a period of interest only may be available to cover refurbishment for example.  In terms of the technical accounting treatment, we would not want to usurp your accountant, but the asset purchase and repayment (not interest) is a balance sheet transaction.


Q. My charity is seeking to raise funds for a new building project.  Total build costs around £600k, of which we already have £200k.  We don't want to delay the start of the build until we have all £600k.  Might CAF Venturesome be the right place to discuss a possible loan?  The building will be on allotment land (permissions already in place) so the building will not have any resale value.  Might this be possible?

A. We’d love to talk to you! Please get in touch directly, all the contact details are in the presentation.


Q. I'd be interested to know how you might help charities that don't have significant earned income - it's a little harder to see how a loan would work in these circumstances.  Would a fundraising campaign have to demonstrate a level of achievement before you would be able to consider such a loan? 

A. Thank you for the question. A number of very successful clients are donation led. In each case, both ourselves and trustees would be looking to understand the track record and ongoing assumptions in order to assess the proposition.


Q. Please can you confirm if the lending is only for UK charities?

A. CAF Bank lending is only to UK charities. Whilst some of our clients operate overseas to some extent, we would require both UK based security and income streams. CAF Venturesome only lends to UK incorporated organisations, whilst they can have international operations. They do not have to be charities but must have charitable objectives.


Q. Do you loan through CAF Bank to animal charities?

A. CAF Bank will consider applications from any UK charity, regardless of cause area.


Q. Do you include environmental impact as a social impact?

A. Yes. Hubbub is a good example of an organisation supported by CAF Venturesome that has high environmental impact.


Q. If my charity is considering loan finance to support a project or property purchase when is the best time to approach a lender?

A. Really good question. We would suggest early enough that the lender’s initial feedback can help you shape your proposition and understand what challenges a lender may see.


Q. Is it necessary to bank with CAF in order to apply for a loan?

A. It isn’t a requirement of CAF Venturesome.  If you take out a loan with CAF Bank, we will require a bank account to be opened as part of the onboarding process in order to process your repayments.


Q. Has CAF been able to support accessing bounce back loans?

A. No, CAF Bank is not accredited by British Business Bank to provide Bounce Back Loans due to the way the scheme is configured.  CAF Venturesome is a referral partner to the Resilience and Recovery Loan Fund.


Q. Does CAF provide expertise to create the business plan?

A. We work with partners to deliver business support and can sometimes help you to get grant funding to pay for this.


Q. Does CAF provide expertise even if no funds are borrowed?

A. CAF has a Charity Advisory Team.


Q. Does CAF provide support to upskill small business to develop a strategy beyond the funding rounds?

A. At the moment we do not have a skills training strand.


Q. You did say you operated in Scotland, but do you have a sister organisation in Scotland?

A. We don’t have a “sister” organisation in Scotland because CAF Bank has a team in Scotland. 


Q. Outside of Covid, do you provide opportunities for clients of CAF to meet peers? Or how can clients network outside of webinars?

A. In normal circumstances, i.e. Before Covid, we often hold events that clients can meet others at.  However, at the moment we do not have any networking outside of webinars.  Perhaps this is something we can look at.


Q. Will the presenters be available for contact after webinar?

A. If you would like to be put in touch with the speakers, please send your details and questions to venturesome@cafonline.org and we will pass them on.

Meet your experts

Holger Westphely

Holger is acting head of CAF Venturesome. He is an expert in social investment strategy and operations and will share his first hand experience supporting dozens of high impact investments from CAF Venturesome, one of the country’s first and most successful social investment funds.

holger-westphely

Richard Hunt

Richard is head of customer and lending at CAF Bank. He works with both charities and Housing Associations to provide appropriate lending; helping them to make a real difference for their beneficiaries.

Richard-Hunt-CAF-Bank

Kemi Folarin

Kemi is the founder of Young People Matter Charity (YPM), an award winning, diverse charity and community action group. To enable YPM to open a new after school club in early 2020, CAF Venturesome provided them with a £60,000 standby facility, to be drawn down as an unsecured loan.

Kemi will talk about how she built the business case for a loan with internal and external stakeholders. She'll also share why the charity decided to fund their project in this way and the benefits that have been realised for the children who use their services.

Kemi Folarin Young People Matter

Jonathan Bryant

Jonathan is the new Secretary / CEO of York Conservation Trust which is custodian of historic and related buildings in York. The Trust’s principle business accounts are with CAF Bank which has also provided secured lending and occasional overdraft facilities.

Jonathan will join us to outline the Trust’s business model which contrasts with much the heritage sector in which he has held senior executive, trustee and consultant roles in England and in Scotland. He will talk about the role of secured lending particularly in the Trust’s development since 1945 and in its future planning.

Jonathan Bryant

More resources for charities and social enterprises

Survive, Adapt and Thrive through crisis


We've pulled together new resources with actions to survive, tools to adapt and strategies to thrive in a crisis.

Newsletters for charities and social enterprises


Subscribe to our monthly and quarterly email newsletters for people working in non-profit organisations.

Charities


Whatever your size, we provide solutions for funding and financing your charity's needs.

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.