Big rise in the total value of Charity Bank loans

The bank approved £11m of loans to charities and other social sector organisations in the first six months of this year, compared with £6m for the same period in 2013

Charity Bank
Charity Bank

The value of loans approved by Charity Bank in the first half of 2014 reached £11m, almost twice the figure for the same period in 2013, the bank has announced.

In the first six months of 2013, the bank approved loans to charities and other social sector organisations worth £6m, itself up from £5m during the same period in 2012.

Charity Bank said that its loan loss rate had remained at 0.4 per cent, meaning that for every £100 that it lends, it writes off or is unable to recover 40p. This rate has remained at the same level since the bank’s foundation in 2002.

Patrick Crawford, chief executive of Charity Bank, said: "Our experience is that charities and other social sector organisations are starting to regain confidence about the economy and becoming more ready to borrow in order to grow their activities where it is prudent to do so.

"The increase in demand for our loans has also been prompted by the effect of cuts in public sector spending on the social sector, compounded by the lack of finance for smaller charities from large commercial banks."

In 2013 the bank made a loss of £804,000, according to accounts released last month.

The accounts say that it expects even larger losses for 2014, but hopes to return to profit in 2016. The accounts say the losses were incurred partly because of a necessary restructuring after the bank was forced to give up its charitable status in 2013 when new banking rules came in.

Earlier this year, the social investment wholesaler Big Society Capital announced an investment of up to £14.5m in the bank. This was the BSC’s biggest single investment to date and is likely to result in it ending up with a 67 per cent equity stake in the bank.

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