Bank loans and specialist lenders

If you need finance to start or grow a business, a bank loan from a commercial or specialist lender may suit your needs, or social investment.

Repayable finance refers to borrowed money: funds made available over a set period which must be repaid with interest.

Repayable finance can include loans, mortgages and social investment. The term of the loan (repayment period) will vary depending on its size, use and the lender’s requirements.

Repayable finance can be used for a number of purposes:

  • as a bridging loan until other income is received
  • to support working capital requirements eg purchase of stock or taking on new staff
  • to fund capital (land and buildings) purchase and development (usually known as a mortgage).

Taking on repayable finance

Used wisely, repayable finance (sometimes known as debt finance) can allow community businesses to ‘go further, faster’, but it can also lead organisations into difficulties if they cannot meet the interest or repayment terms agreed on the debt.

Before taking on any debt you will need to produce a comprehensive business plan underpinned by realistic budget and cashflow projections.

You will also need to ensure that your organisation is in the right shape, with good financial controls and systems and strong leadership and governance. 

Some lenders may require security for their loan or make conditions in their loan that can constraint an organisation’s freedom to, for example, borrow money from another lender without their permission.

Getting ready to take on repayable finance is known as investment readiness.

Check if you are 'investment ready' by clicking here

Commercial lenders

If you are thinking about taking on a loan, your first port of call will be your bank, if you have one. They already know you and if you have a track record of good financial management they may be willing to consider a loan. 

Most of the major commercial banks have specialist teams dedicated to the community and voluntary sector:

Santander

Our treasurer’s accounts have been designed specifically for not-for-profit organisations such as clubs, societies and charities with an annual turnover of up to £250,000 and up to three signatories.

Santander

RBS

Social and community capital.

RBS

HSBC

Small business loans.

HSBC - Small business loans

Barclays

Not for profit/charities.

Barclays

Specialist lenders

Loans for private businesses usually come from mainstream banks, however there are now specialist banks and institutions that lend specifically to organisations delivering a social purpose.

They may be more likely to take a risk on a community business or charity as they are interested in social return (doing good) as well as financial return on their investment.

Charity Bank

Charity Bank is an ethical bank that exists to lend to charities and social enterprises.

Charity Bank

Unity Trust Bank

Unity Trust Bank are the bank for organisations and businesses that aim to create community, social or environmental benefit in a financially sustainable way.

They seek to put social change at the heart of everything they do by offering specialist banking and finance to organisations that have a positive impact on their communities.

Unity Trust Bank

Triodos

Triodos Bank is a world leader in sustainable banking, offering a range of accounts for individuals, businesses and charities.

Triodos

Cooperative and Community Finance

We lend to organisations that are owned and democratically controlled by their members, who are usually either employees, customers or members of a community.

Loans from £10,000 to £75,000 are readily available, and we are able to lend up to £150,000 using other funds.

Cooperative and Community Finance

Social Investment Business

The Social Investment Business exists to raise and connect capital to achieve the maximum possible social impact in the UK. We work to provide simple finance for extraordinary charities and social enterprises in the form of loans, grants and other investment products.

Social Investment Business

CAF Bank

CAF Bank exists to support the charitable sector. They offer secured loans for UK registered charities and not-for-profit organisations looking to grow their social impact.

CAF Bank

Social investment

Social investment is the term given to repayable finance which is invested primarily for doing good. Social investors and lenders invest in projects that are expected to have both a financial return and positive social benefit to the community.

Good Finance

Good Finance helps charities and social enterprises navigate social investment and can provide you with guidance and suggested investors. Find out more on their website.

Click here to visit Good Finance

Big Issue Invest

Big Issue Invest are the social investment arm of the Big Issue.

They extend the mission of the Big Issue by investing in social enterprises and charities that prevent and tackle poverty and create opportunity for people across the UK.

Big Issue Invest

Clearly So

Clearly So raise investment for businesses, enterprises and charities focused on social impact.

They help individuals and institutions use their capital to back change.

Clearly So

CAF Venturesome

CAF Venturesome a registered charity that’s been connecting charities and social enterprises with philanthropic capital for 14 years.

  • We provide affordable loans to help charities make an impact
  • We’re a leader in social investment and have made over 500 social investments, totalling over £40m
  • We’re supported by funders who want to use their charitable funds to achieve both a social and a financial return.
Venturesome

Big Society Capital

Big Society Capital is an independent financial institution with a social mission, set up to help grow the social investment market.

Big Society Capital

Key Fund

Key Fund provides investment to social enterprises working across the North of England (Yorkshire, North East, North West, West Midlands and parts of East Midlands).

Key Fund offers loan packages ranging from £5000 to £300,000 to social entrepreneurs, new and existing social enterprises and voluntary/community organisations aspiring to become social enterprises.

Key Fund (north of England)

Foundation East (east of England)

Foundation East are a membership organisation that lends money to business owners across the counties of Bedfordshire, Cambridgeshire, Essex, Hertfordshire, Norfolk, Suffolk and neighbouring areas, offering loans up to £100,000 to social enterprises and growing businesses.

They provide help and support with completing the application forms and business plan templates.

Foundation East

London Rebuilding Society

London Rebuilding Society are passionate about creating new people-centred social and financial products and services; transforming lives by improving people’s homes, health, wealth and well being.

London Rebuilding Society