# Charity Bank issues a guide for charities on borrowing money

- Link: https://fundraising.co.uk/2013/11/07/charity-bank-issues-guide-charities-borrowing-money/
- Published: 2013-11-07T12:00:03+00:00
- Author: Howard Lake

When is a loan a good choice for a charity or social enterprise? While fear of debt,
especially in the current financial climate, is sensible, the right kind of loan
can help organisations thrive.

Charity Bank has issued a [Guide to Borrowing for Charity Trustees](http://www.charitybank.org/charity-loans-guide)
to help them decide if a loan could be right for their charity or one of its projects.
It has been published in blog format by Charity Bank’s Head of Banking, Carolyn 
Sims. It appears on the National Council for Voluntary Organisations’ (NCVO) website
and also on Charity Bank’s own site.

 ⌊Carolyn Sims, Charity Bank⌉Sims said: “Loans can help organisations become more
sustainable – for example, by enabling them to acquire a property rather than paying
rent. But charity loans are not right for all projects or all organisations, so 
trustees need to understand what loan finance can offer to determine if it is a 
suitable option for their charity.”

The guide describes five main benefits of loans over grants:

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1. Fewer restrictions

2. Non-competitive

3. Money when you need it

4. A relationship with financial experts

5. Cash flow

The guide then describes **what lenders look for in potential borrowers**.

As well as ensuring that an organisation can pay the loan back, Sims explains that
lenders will look at the charity’s governance, including whether its trustees and
staff have a suitable skill set that includes the key business areas of finance 
and law.

She added: “Where social lenders, like Charity Bank, differ from commercial banks
is the attention paid to social impact. If you can illustrate and provide tangible
examples that your organisation is delivering social good, they will be much more
willing to provide you with a loan”.

_Photo: [IOU in a piggy bank](http://www.shutterstock.com/pic-31157884/stock-photo-iou-card-in-piggy-bank-signifying-debt-or-financial-problems.html)
by Brian A Jackson on Shutterstock.com_

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