A Managing Director’s Perspective: buying property with loan finance

The charity aims to provide individuals with the support and tools needed to move towards a happier, healthier life.

In 2012 the charity also began offering supported accommodation so that it could continue to better respond to its service users’ needs. In order to gain more security for the charity and its residents, it later took out a Charity Bank loan, drawn in two parts, to purchase two properties.

Managing Director Alan Andrews speaks about the benefits of moving away from renting and their experience of loan finance.

What made you decide to move from renting to owning?

When we started to offer supported housing in 2012, it made sense for us to lease properties. But as we continued to grow this side of our service and realised the need would only increase, we recognised that renting left us in a precarious position. Everything we do is to help the people who access our services and we never want to end up in a position where we have to ask people to move out because rent has increased too much or the landlord has decided to sell. So we decided to look into buying some properties.

Why did you decide to take out loan finance rather than looking at alternative funding?

We did try several other options, but nothing worked out. There is so much need and everyone is fighting over the same pot of money. There are also lots of conditions tied in with grants and funding, the processes are really long and in the end there’s no guarantee. We decided that the best option for our future growth was to take matters into our own hands and apply for a loan instead.

Did you have any concerns about taking out loan finance?

It’s obviously a massive step but you don’t get anywhere without taking risks. We’re motivated by the people we’re working for and we knew that this was something we needed to do to carry on supporting them to the best of our ability. That for us far outweighed any of the risks involved.

How did you find the process of applying for the loan?

It was very long. We were also dealing with two lenders as Charity Bank were providing 60 per cent of the money required and the Wales Council for Voluntary Action (WCVA) the other 40 per cent. So that of course made the process even more complex.

The first time was the most difficult, because it was all new to us. But now we know more about how it all works and the second one felt much easier. I dare say each time we do it, it will become easier again.

Was there anything you felt could have worked better for you?

Having three lots of solicitors made things very complicated. We often felt as though we were being told different things and it was quite exasperating. If we could go back and do it again, we’d take more care when choosing our own solicitors and we’d ask for more help in streamlining this part of the process.

Is there anything you think other charities should know when considering loan finance?

It’s really a lot of work and you need the right infrastructure to deal with it. We’re lucky to have a full-time admin team here to pick up the workload. If we hadn’t had that, we still would have gone ahead but would definitely have needed some external support. There’s a lot of time and specialist knowledge required.

Is there anything you feel the lenders could have done to simplify the process for you?

I don’t think so. In hindsight it was clear to see that, although it felt like a lot when we were doing it, it was necessary for there to be such a high level of due diligence. Especially with social lenders like Charity Bank, you feel as though there’s a clear reason they’re being so thorough. They don’t lend to just anyone, but want to make sure it’s right for you as an organisation as well as financially viable for them. And when you get a loan with them it feels like a real stamp of approval so it’s worth it.

How did you find working with Charity Bank?

I found Charity Bank really great to work with. They’re always on the other end of the phone. They might not have the answer we wanted but they were always there and that support has been invaluable. It doesn’t feel like they’re just providing a loan but like they really connected with us and what we’re trying to achieve.

Do you think it’s important for charities and social enterprises to be able to access social investment?

Definitely. At the end of the day, you need a lender that has some understanding and compassion for what you do. And if anything should happen to go wrong, a social lender will do their best to support you and help you get back on track again.

What’s next for Chooselife Wales?

We want to maintain the drop-in centre, which is our core service still. That’s been going for 20 years and we want it to be here for at least the next 20 as well. For our supported accommodation we need to continue to establish the houses we’ve got and keep responding to needs in the area. But we’d also be open to expanding into other areas as well. We’ve got a solid infrastructure in place now and so there’s no reason we couldn’t use that to extend our reach and impact.

What are you most proud of when you speak to your service users, and reflect on how far your organisation has come?

We haven’t lost our compassion or empathy for people and have continued to believe that change is possible. We don’t get many pats on the back for what we’re doing, from the community or the powers that be, because the group of people we work with are often seen negatively and discriminated against. But what’s forgotten is that a high percentage have ended up in their current situation because of traumas they’ve experienced and that they deserve a chance to be supported through recovery and to have a more positive future.

The views on this page are those of Chooselife Wales.