“Charity Bank helps all sorts of charities”

“When you’re a smaller charity, you’re seen as a bigger risk… but Charity Bank helps all sorts of charities, whatever their size.” Read our interview with Gemma Heard, Social Enterprise Development Manager at Ella’s.

You’ve spent your Charity Bank loan on a two-bed property to use as a safe house for female survivors of trafficking. Why are safe houses so important?

Having a safe home means that women can focus on their recovery and wellbeing, process their trauma and look ahead to rebuilding their lives. And many of these women really do need to be in a secure, secret location for their own safety.

We have a few other safe houses that we rent, but this is the first property that we’ve bought.

What made you decide to buy a property?

There are a few reasons. Firstly, there are risks involved with renting. The landlord could decide to take back the property, and then we’d have to find new homes for the women.

In the long run, owning rather than renting is better financially for the charity. It will also give us a lot more flexibility when it comes to the women we take in. Most of our income comes from housing benefit, but some trafficking victims aren’t eligible for any funding or benefits. In a few years’ time, when we’ve paid off the loan, we’ll be able to offer places to women with no recourse to public funds.

Could you have bought the property without taking out a loan?

I don’t think so. We were very fortunate that we were given a substantial gift and a grant, which meant we had a good deposit, but we weren’t in a position to pay the rest of the purchase price any other way.

Why did you choose Charity Bank for your loan?

We spoke to quite a few lenders. Charity Bank was one of the better options when it came to the interest rate. I also felt they were very easy to work with. They even connected us with a couple of other funders, and suggested a co-loan scenario with Trust for London, as they thought that would be the best option for us.

When you’re a smaller charity, you’re seen as a bigger risk. Some lenders would rather wait until you’ve got more of a track record and can demonstrate that you’re able to repay, before they’ll take you on. But Charity Bank and Trust for London are designed to help all sorts of charities, whatever their size.

How does the co-loan work?

Charity Bank has the first charge on the property – they’re the primary lender – and then Trust for London has a secondary charge.

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

There are a lot more steps than when you’re buying a house as an individual, and a lot more governance is needed, so the conveyancing process was quite lengthy and complicated.

However, the loan process itself was very straightforward. I think that’s because it’s designed for organisations like us. We’re a small charity and quite early on in our journey. It was our first time doing anything like this, so it was all new to us. Charity Bank offered advice and guidance and handholding, which was so useful.

I really value the relationship that we’ve built with the team and how patient they were.

Was it helpful to have a named contact at Charity Bank who you could pick the phone up to?

It was hugely helpful. We’ve developed a great relationship with Alan, who spearheaded this journey for us. And then throughout the conveyancing process, we were pretty much emailing the Lending Services team every other day. They were brilliant.

I actually don’t know how organisations cope if they have to go through a call centre or just phone a main line, because there’s so much backwards and forwards on paperwork and all the little details.

Is there anything charities should be aware of before they apply for a loan, or anything they can do to make the process easier?

You need to have your financials in order, and your reason for buying the property needs to align with your overall strategy. Taking on a loan feels like a big responsibility for a charity and its trustees, so you definitely need to have the support of your board.

It’s also a good idea to find out exactly what the restrictions will be on the loan. When you’re buying an asset as a charity, there’s a lot of small print about how that asset can be used. They’re pretty standard clauses, but we were a bit surprised, so asking about them early on would help with planning. If you’re buying the property for a specific reason and decide to change direction, will you be able to use that property for a different purpose?

Would you recommend that charities and social enterprises speak to Charity Bank?

Yes, 100%. In the social sector, everyone’s very friendly; everyone’s very helpful. But with Charity Bank, you also have the assurance that they’ve been doing this for a long time. They were the forerunners in this space and they have the expertise.

Do you plan to buy any more properties?

Not in the near future. We’re working with the Women in Safe Homes Fund, through Resonance as an intermediary. They’re going to purchase properties for us to rent off them for 10 years. I definitely think that buying more properties ourselves will play a role in our long-term strategy though.

We’re really grateful to Charity Bank. I’ve spent the last two years looking at different avenues and ways of increasing our portfolio, but being in London makes it all incredibly hard because property prices are so high. Now that we have that first asset, we can demonstrate that we have a track record of repaying, which means that other funders and lenders will actually start to take notice of us.

If you need a loan for your charity, please visit Charity Loans For UK Charities & Social Enterprises – Charity Bank