'Evergreen' loans launch

By Helen Warrell, Third Sector, 20 June 2007

Ethical banking expert Triodos has pioneered a new system of loans that will allow charities and social enterprises to repeatedly take out and pay back loans up to a fixed amount within a fixed time period.

The revolving credit facility, sometimes known as an 'evergreen' system, has been used before in commercial markets but has not previously been applied in the third sector.

Social landlord Westlea Housing Association is the first charity to take up the offer. It will use the loans in its commercial subsidiary, Oakus Wiltshire.

The size of the loan is confidential, but it has been agreed for a five-year period. Oakus can draw down any amount up to the full sum, and will pay interest only while the loan is in use.

"This is an arrangement that suits our business," said Tim Jackson, finance director at Westlea.

"We need access to finance during the construction phase, and the ability to repay borrowing without being penalised once properties have been sold. The revolving agreement gives us the flexibility to do that."

Sue Cooper, manager of the social banking team at Triodos Bank, said: "It's a new idea and the reason that we're excited is that housing associations are being encouraged to look for alternative sources of income. For similar organisations, this gives a model to develop alternative income streams.

"If you are looking at charities more widely, you have got to be doing an activity such as buying property, which involves up-front costs and then starts to generate a chunk of income to repay the loan."

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