Charity Bank provides loans up to a maximum of £4million and can provide larger amounts in partnership with other social lenders. Each case will be reviewed on an individual basis and the loan amount offered will depend on factors such as how much you can afford to comfortably repay each month and what assets you can offer as security for the loan.

c. What happens if you can’t lend to me?

If we don’t believe that we are able to assist you we can signpost you to other social lenders who may be able to help you or to other sources of finance, for example grant funders.

We may also refer you to social sector organisations who provide investment readiness support, such as the Reach Fund who could provide you with support in order to prepare and submit future loan applications. For example, a governance review or a cash flow forecast.

d. What is the interest rate?

Charity Bank lends at rates of interest (the margin) above the Bank of England base rate. An appropriate interest rate is determined for each individual proposal. Charity Bank can sometimes provide fixed rate funding for up to 5 years.

e. What are the other costs and fees for the bank, lawyers and others?

We charge an arrangement fee, which is typically 1% of the loan amount and payable upon acceptance (deadline for acceptance is 30 days from loan approval), and a commitment fee which also becomes payable once you have signed a loan agreement. The commitment fee is charged on the undrawn balance of the loan between acceptance and drawdown and helps cover the bank’s costs in holding funds available ready for when you wish to draw on your loan - it is typically half the interest margin and payable quarterly.

The legal and valuation costs, and any other fees incurred, will vary depending on the requirements and complexities of each individual case. When you contact us with the details of your project, we will be able to provide a better indication of possible fees involved and we will work with you to ensure that costs are kept to a minimum.

f. Do I have to draw down the funds in one go once I have signed the loan agreement?

Once you have completed any conditions for the loan and the loan agreement has been signed the funds are available for drawing when you are ready, for example when you complete on a property purchase. In the case of refurbishment or development projects you will normally need to draw the loan as you incur costs.

g. What repayment period will you consider?

Loan repayment periods can be between six months and twenty-five years and will be determined based on the most appropriate, affordable duration for your organisation, when taking your circumstances into account

h. Can we make lump sum reductions or repay early?

Yes, you can repay either in part or full should you choose. There are no financial penalties for this other than when the loan is being refinanced by another lender within the first five years of the loan period or if you prepay a fixed rate loan. You can find further information on financial penalties in the Loan Agreement.

i. How do I repay the loan?

The loan will generally be paid by capital and interest on a monthly basis over the agreed term (see also (k) below). This will be taken by direct debit from your normal clearing bank.

j. Do we need to bank with you to take out a loan?

No, you don’t have to bank with us to borrow from us. We do not provide transactional/current account banking services.

k. Can we have an interest only period?

Yes, this can be an option in certain cases. Usually this will apply to the start of the loan to cover a period where a project is being completed or income streams are being built up. Time periods are subject to negotiation and can be discussed based on your project and circumstances.

l. What can I use the loan for?

A loan can be used for any legal purpose which supports the social objectives of the organisation. The loan purpose will be agreed and approved as part of the application process; should circumstances change, the borrower must let us know and any adjustments will need to be agreed.

m. What is a secured loan?

A secured loan is when the money that you borrow is secured against assets that you own, e.g. property or an investment portfolio.

n. Do you provide unsecured loans?

As a general rule, we only offer loans on a secured basis but please contact us to discuss your particular needs.

o. When will we find out if our loan has been approved?

We aim to provide an answer within two weeks, providing we have all the information required.

p. How quickly will we receive the money?

Once a loan is agreed, the amount of time taken before the loan can be drawn down will vary depending on external factors, legal requirements and the level of complexity involved. For straightforward transactions, customers should allow up to twelve weeks, but there is no definitive timescale.

q. Will you want the trustees to be liable for the loan?

If you are an unincorporated organisation, your trustees will, by default, be personally liable for the loan. This is not the case for charities and social enterprises that have a legal corporate status (such as company limited by guarantee, charitable incorporated organisation, or community interest company). We can provide signposting to support the process of achieving corporate status if this is appropriate for your organisation. We do not require personal guarantees from trustees.

r. How much will the repayments be each month?

Repayments are specific to each loan case and circumstance. Please call us to discuss potential indicative loan repayments as a guide.

s. Do you want a charge on all our assets?

It’s not standard practice for us to take a fixed charge over all your assets, rather we take a charge over sufficient assets to ensure that we have required security cover.

In some circumstances we will require a mortgage debenture.

t. Who will be my contact at the bank?

You will have a dedicated relationship manager, who will form part of a team to support you through both agreeing and drawing the loan down.

u. Can I speak to another customer about their experience of your loan process?

We can provide you with contact reference details for similar organisations in your area who have previously taken out loans with us and who would be happy to talk with you.

You can also read first-hand accounts of the loan process on our website: www.charitybank.org/know-how

v. What happens if things don’t go to plan in the future and we cannot afford the repayments?

As a social lender, we will always try to be supportive and understanding of any difficulties you may encounter and will seek to support all borrowers to ensure their social mission continues to be delivered. If something is not going to plan or you believe you need support or assistance, please get in touch at the earliest opportunity so we can discuss your situation with you.

2. We guide you through the application process

a. What information will we need to provide?

To give an overview, we would require details of your organisation, the key people including trustees and/or directors, the project you want to undertake, current and future finances and the property or properties that would be put up as security for the loan. The specific elements required within those categories and any additional information needed will vary for each case. Please contact us to discuss this in more detail.

b. Will someone come to visit us and see our project?

We meet where possible all of our borrowers and would welcome the opportunity to come and visit you and discuss face-to-face how we might be able to support you.

c. Can we get help to produce the information required?

Your relationship manager will work with you to help gather and produce the information required. We will also be able to direct you to other third sector organisations and support services that can assist with this.

d. How long does it take?

We aim to provide an answer within two weeks once we have all the information required.

3. We let you know our decision

a. When will we hear?

We will let you know as soon as a decision is made, once our internal processes have been completed.

b. How quickly can we get the money?

c. Will we get an indication of whether the loan is likely to be approved?

Although we will be able to comment on the potential viability of the project and loan application, we can’t give a definitive answer until the application has been reviewed in full.

d. Can we appeal if our application is not approved?

We are open to discussion and review if you believe any of the information provided has been misinterpreted or if additional information becomes available which may impact our initial decision.

4. Everyone works together to meet the loan conditions

a. What do we need to do once we have the offer?

Firstly, you will need to confirm with your relationship manager that the terms and conditions of the offer are as expected, that you can meet them and none of your circumstances have changed. You will then work with our staff and your legal team to ensure that the paperwork and various conditions are completed and met.

b. Who can sign the agreement?

Normally, it will be nominated trustees or directors of the organisation as you have agreed internally and communicated to us as part of the application process.

c. Are there any documents we need to return to you?

We will send you the loan agreement and relevant security documentation for completion and return. Other documentation which you will need to send us to draw down the loan will be detailed in the loan agreement (in particular, the Conditions Precedent).

d. Who will we speak to at the bank to help us through the process?

You will have contact details for both your relationship manager and staff members within our loans administration and credit teams, who will be able to support you through the process.

e. Can we choose our own lawyers and valuers?

Yes, you will choose your own lawyers and valuers although the valuer will need to be approved and instructed by us. Your relationship manager will be happy to discuss appropriate choices with you.

f. Who contacts the lawyers?

You will contact your chosen lawyers and we will instruct the lawyers who will act for the Bank.

g. Who pays the legal costs?

You are responsible for all legal costs (including Charity Bank’s) and disbursements in respect of the transaction.

h. Who instructs the valuers?

We will instruct your chosen valuers after you have agreed the cost with them and confirmed to us to proceed.

i. What can we do to ensure all runs as smoothly and quickly as possible?

Ensure that all requested information is supplied promptly, that there is good, ongoing communication, and that all requirements and preconditions are satisfied.

5. You request your funds

a. What information do we need to supply?

You’ll be asked to supply a draw down request form and any supporting information detailed in your loan offer.

b. Where will the money be sent?

Normally the money will be paid to your bank account but in some circumstances, such as buying property, it will be paid to your solicitors.

Nothing herein constitutes advice or a recommendation. Professional advice should be sought before any course of action is taken. Loan applications are subject to a credit assessment, which does not impact your credit score. There is no guarantee that you will receive any funds following the submission of a loan application. Rates/fees depend on individual/business circumstances. By entering into a loan agreement, you are putting any property and/or assets secured on the loan at risk should you default and cannot make repayments in accordance with the terms and conditions of the loan provided to you and some or all of the funds lent to you may become repayable immediately. Links/signposting to external providers should not be considered a recommendation or endorsement of those providers’ products and/or services.

Registered Office: The Charity Bank Limited, Fosse House, 182 High Street, Tonbridge, TN9 1BE. Company registered in England and Wales No. 4330018. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register No. 207701.

Back to Loans

1. You make an enquiry

2. We guide you through the application process

3. We let you know our decision

4. Everyone works together to meet the loan conditions

5. You request your funds

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