Repayments will be recycled into community investment, says the Adventure Capital Fund
The ACF is the parent charity of Social Investment Business, which has administered the Communitybuilders fund since it was set up in 2009 with £60m from the Communities and Local Government department and £10m from the Office for Civil Society to support local community projects.
Communitybuilders will become an "evergreen" loan and grant fund, where repayments are recycled into new community investment, said Sir Stephen Bubb, chair of the ACF.
It will provide money for community organisations to buy and develop local assets such as libraries, he said. The fund, currently closed to new applications, is expected to reopen within a few months, a CLG statement said.
The government has previously faced criticism because its rules meant the fund had to pay out grants by the end of each financial year, before many groups were ready to take it.
Clark said this was no longer the case.
"We need to make sure that every penny available goes to voluntary and community groups at the best time for them," he said. "They shouldn’t be forced to distort their plans because of central red tape."