A trustee’s perspective: using loan finance to secure a trust’s future

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Glover’s Trust offers sheltered accommodation in Sutton Coldfield for the over-60s. Its cottages were built in 1932 and badly in need of updating, so the trust embarked on an renovation project with the help of a £1.53 million loan from Charity Bank.

Treasurer David Skellum explains why taking out a loan was the best option for the trust.

Why did you need to take out a loan?

We have a nice site, in a good location, but it was becoming more and more difficult to fill the cottages. People who came to view them kept saying the rooms were too small and there wasn’t enough storage space. We realised that we needed to extend them in order to attract new residents. The electrics also needed updating and they were due to be redecorated. It made sense to do everything together, rather than bits at a time.

What made you decide to take out a loan, rather than relying solely on other income?

We’d raised almost £200,000, but it was nowhere near enough. Homes England offered us a grant, but we had to prove that we could cover the rest of the funds ourselves. So we approached Charity Bank.

How did the trustees weigh up the risks and benefits of taking out a loan?

The trustees were understandably nervous about taking out a huge loan, but the only other option was to let things spiral out of control. We knew that if we didn’t do something soon, we were in danger of losing the whole estate. A lick of paint wasn’t going to solve the problem.

We’d changed status, so the trustees had become directors, which overcame the issue of them having direct responsibility. And we went through the finances time and time again to ensure the project was viable. There was a lot of back and forth with the contractor to make sure that what we wanted was achievable and that we could stick to the budget.

With more people living longer, our type of accommodation is needed, so we were confident that we could fill the refurbished properties, and we’d be able to service the loan.

Why did you choose Charity Bank for your loan?

The joy of Charity Bank is that you have people like our Regional Manager Peter Hughes. If we were having a problem, he’d have seen it a hundred times before. With Charity Bank, you actually talk to real people and they get to know you – you're not just a name on a list.

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

Definitely. The thing about trusts is that they want to help each other.

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

Pretty straightforward. Everyone asks for something slightly different, but we’d always kept a close eye on the finances, so it wasn’t difficult to get documentation. Everything worked wonderfully, without so much as a hiccup, and we were able to draw the money down as we needed it. The biggest challenge we had with the project was getting the utilities sorted!

Do you have any advice for other charities considering loan finance?

Make sure your budgets are right; constantly test them to check that your figures stand up. And look at what other people are doing. Whatever you’re trying to achieve, there’s a good chance that others have done it before you.

What difference has the project made?

It’s much easier to let the cottages out now. People come for a viewing and they want to live here. It’s a great community. You can walk out your front door and there’s always someone to chat to. We only had single people here before because the cottages were so small, but ten of the properties are suitable for couples now.

What’s next for Glover’s Trust?

Having a break! It was a huge project; the refurbishment took over a year to complete, but we’d been working on it for four years before that. The tenants had to move out of their properties while the work was taking place. Some stayed in other cottages that we’d deliberately left vacant, while others moved in with friends or family. In all, we helped with 63 moves! So it’s good just to get back to normal life.

Road to Growth