The not-for-profit bank decided to undertake a major capital initiative after its 2006 figures, announced at its AGM last week, showed a 50 per cent increase in net lending over the past year to £16.4 million. Figures also revealed an unprecedented increase in loan enquiries, topping £100m for the first time.
Announcing plans for Charity Bank to more than double in size by 2012, chief executive Malcolm Hayday said: “Our significant increase in lending last year shows that borrowing is clearly becoming a mainstream source of finance for many charities and social enterprises. This reflects a broader change in the way that they manage their finances and underlines why we need to expand to meet this need.”
He said borrowing could play a “fundamental part in good financial management.”
Charity Bank, which has lent more than £55m since its launch in 2002, grew by 5 per cent last year. It currently has £17m loaned out, with another £6m committed.
Hayday said continued expansion would be funded by raising investment capital from entrepreneurial foundations. He said: "If we raise £10m from entrepreneurial foundations, we will be able to raise another £60m of deposits by 2010, which will allow us to have a loan portfolio of £100m. It’s a big step, but not impossible given the strength of enquiries."
He also announced plans to develop a system for measuring the social impact of its investments, and a more widespread regional network to allow it to develop closer working relationships with its loan applicants, investors and depositors.