“We’ve saved up to £500 a month by refinancing”

When Claire Gavaghan joined Derwent Training as CEO, the charity was having financial difficulties, which weren’t helped by an existing loan on a high interest rate. A refinance loan was needed as part of the strategy to save the charity.

Can you start by telling us a bit about Derwent Training?

It was set up by a group of employers in 1988 as a not-for-profit to deliver engineering apprenticeships in the region. We’re publicly funded, like a General Further Education College, but we’re governed by a Board of Trustees. Along with engineering apprenticeships, we also now offer leadership apprenticeships and corporate training courses.

Why did you need a refinance loan?

Education in this country has changed massively since the company was founded, which led to all kinds of challenges for Derwent Training. When I joined as CEO in 2019, Derwent Training had made a loss every year for eight years. I was tasked with saving the charity because it was about to close.

Prior to me arriving, the Board had taken out a £280,000 loan because they needed to get out of a black hole and build some reserves. We were able to pay back £50,000 a few months after I started, thanks to the changes we made and getting a Bounce Back Loan.

However, the rate for the rest of the loan just kept going up and up, until it hit around 12%. We’re publicly funded, so we were using public money to pay down this loan, which didn’t feel right. We have a tremendous Board and one of our trustees, Sarah, works in finance. She suggested that we look for a loan with better terms, so refinancing became a key part of our strategy to lower our outgoings.

Why did you choose Charity Bank for your refinance loan?

Charity Bank was recommended to us. Sarah did the initial research and said, “I’ve spoken to them. This is the bank that we should go with.” So we did. The interest rate is a lot lower than we were on. Depending on where the base rate is, we’ll be saving £500 pounds a month. And we’re now in a position where we’ll soon be able to pay off another £50,000.

Are you in a better financial position now?

Yes. We’re now making a decent profit each year, which the money we’re saving on interest will help towards. This year, we’re looking at a profit of around £84,000, which is a massive leap considering where we were back in 2019. It means we can really invest in the charity, which will benefit our learners.

We’ve just opened a materials testing room with a £26,000 tensile testing machine, for example, which is something that no other college in the area has got. We’re also currently refurbishing our building and buying new furniture. And we’ve been able to give our staff a 6% pay increase, to properly reward them for the work they do.

I’m very happy that we were able to refinance to a much better rate, and I’m happy to be with Charity Bank. It was absolutely the right decision.

If you need a refinancing loan for your not-for-profit, please visit https://www.charitybank.org/charity-loans