Voluntary and community organisations are increasingly turning to loans and equity finance to raise money. Whether it’s a means of securing capital to kick start projects, or bridge gaps between receipt of grant payments, they can be useful tools. The money can mean not missing out on a valuable opportunity.

But voluntary and community organisations need to be sure that a loan is an appropriate form of finance, and there are risks involved. You need to be sure that you can repay a loan, and that the institution lending the money has a good reputation that sits well with your members, trustees and supporters.

Loans and equity finance should not be seen as a traditional income stream and both require a degree of financial discipline. Where conditions are right, they can have a tremendously positive effect, but they are not suitable for every organisation at all times.

This overview explains why your organisation might look at utilising loans or equity finance.