Modernisation loans available from April

Futurebuilders to issue interest-free advances of between £30,000 and £500,000 to help with mergers

Voluntary organisations with incomes of more than £750,000 will be able to apply for loans from the new modernisation fund at the beginning of April.

The £16.5m fund, which was one of the key strands of last month's £42.5m third sector action plan, is being established primarily to facilitate mergers.

Organisations seeking specialist advice and guidance on merging will be able to apply for loans of between £30,000 and £500,000, and these will be interest-free for up to five years.

Futurebuilders, the Government-backed loan fund set up to help voluntary organisations win public-service contracts, will issue the loans on behalf of the Office of the Third Sector.

"This is a great opportunity to use Futurebuilders' existing infrastructure to quickly support a major government initiative and to get funds out to the sector to address immediate and pressing concerns," said Jonathan Lewis, chief executive of Futurebuilders.

Capacitybuilders, a non-departmental public body, will open a small grants programme in early summer for third sector organisations with turnovers below £1m as part of the modernisation fund.

The grants will be used to explore the benefits of collaboration, merger and restructuring.

Funding will be targeted at organisations working in areas at most risk of being affected by the economic downturn and which provide services, such as debt advice and homelessness support, that help communities through the downturn.

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