Charities urged not to miss out on interest-free loans

Charities and community groups are missing out on a great way to fund their organisations through interest-free loans, says the boss of the Bucks Big Society Bank.

The bank has already lent tens of thousands of pounds since being founded in March 2011 following an initial investment of £75,000 from Buckinghamshire County Council.

But far more groups could and should be benefiting from the scheme, says Guy Birkby, Interim Chief Executive at the Heart of Bucks, which administers the bank.

“There is a lot of money available at very cheap rates and we are keen to lend it to deserving organisations,” said Mr Birkby.

“We know there are about 4,000 charities in the county and yet, in the four years of the bank’s existence, only a very small number have taken loans.”

Mr Birkby, who was a senior bank executive for many years, said: “It’s a relatively easy process, so my message is for worthy groups to start applying now. I think this is a matter of awareness, so we are trying to vigorously get the message out there to alert charity trustees that this source of funding exists.”

Organisations eligible for funding need to be based in Buckinghamshire and be providing services or support just for local residents. The loans, starting from £1,000 to £30,000, may be used for a variety of purposes including equipment and premises cost. They could also be used as a bridging loan while the group awaits other funds.

There are no requirements for any security or legal fees and it is an extremely cheap way of raising finance as groups pay no interest. The successful organisations do have to show they can service the debt and then pay an administration fee, charged on a sliding scale beginning at four per cent and reducing to one per cent by year four – and this is the only cost.

One of the beneficiaries of the bank has been Aylesbury Youth Motor Project, a charity which has given hundreds of young people first-hand experience of vehicle mechanics over the last decade.

Rob Shirley, motor project manager, described the Big Society Bank as a ‘wonderful’ scheme.

He said: “In a nutshell, if it wasn’t for them (the bank), we probably wouldn’t be running now because we would have had to shut down. The fact is that as the kids are on holiday, the schools don’t pay and it’s a very bad time financially for us.”

Mr Shirley said the lending process at the Big Society Bank is easy to follow and that a loan from a traditional bank probably wouldn’t have been possible. The motor project, in Edison Road, Aylesbury, has so far been given a total of £35,000 in loans, much of which has already been repaid.

“The bank makes a massive difference but there are organisations who probably don’t even know about it and it would be nice to make them aware that there are people like this out there helping charities,” he said.

Two years ago, Buckinghamshire County topped up its original £75,000 with a further £105,000 after the value of the project became increasingly clear. Wycombe District Council also gave money to the BBSB along with a number of private donors.

Martin Phillips, the County Council’s Cabinet Member for Community Engagement and Public Health, explained that the Council saw its contribution – which can be reclaimed at some point in the future if members wish – as an important investment.

He said: “The purpose of the bank is to try to stimulate and support enterprising initiatives in the community because social enterprises, by their very nature, find it difficult to raise traditional funding.

“We know our money has been put to great work by the organisations that have borrowed from us, and I now hope that many more people come forward to apply for funding.

“We are aware public money is in short supply these days. However, the only way we can encourage social enterprise organisations to take risks is for us, as the sponsors, to take risks as well.”

Groups who have benefited so far also include: Monks Risborough Cricket Club (£15,000); Chiltern Dial-a-Ride (£15,600); Chesham Cricket Club (£30,000); Winslow Bowls Club (£5,000).

?Organisations or donors wishing to contact the Bucks Big Society Bank should get in touch with Guy on 01296 330134 or email