Loans require financial discipline so you need to be confident that you can budget effectively and forward plan your likely income and costs with a high degree of accuracy.
Key questions that need to be asked include:
- will the project make a surplus after loan repayments?
- will the project allow more beneficiaries to be helped?
- does your constitution include the power to borrow and pledge assets? If not you need to seek expert advice to ensure your organisation can undertake borrowing
- are your trustees, members, staff and funders happy with the idea of using loan finance?
