Loans are used by voluntary and community organisations and social enterprises for a variety of purposes. Perhaps the most common example is to buy or develop buildings, but they are also used to invest in equipment or staff, or to provide cash flow where funding (or payments) will be received in arrears.
New contract or trading activity is frequently funded through loan finance, and in recent years the range of loans available to the sector has increased. Many high street banks now provide packages tailored to the sector, along with specialised finance packages from sector specialists, such as Charity Bank or FutureBuilders.
Loans are not suitable for all organisations or all types of activity. But where they are suitable, they can have advantages over other forms of finance, including higher levels of flexibility and less bureaucracy – as well as the obvious disadvantage that they have to repaid… with interest!
