A northern social bank will use a regional bond to provide £50 million in loans for social enterprises and small charities in Yorkshire and Humberside over the next few years
Herpreet Kaur Grewal
A northern social bank will use a regional bond to provide £50 million in loans for social enterprises and small charities in Yorkshire and Humberside over the next few years, it emerged last week.
The move was revealed by Malcolm Hayday, chief executive of Charity Bank UK, a national organisation that aims to support social enterprise and whose northern regional office will be launched next month by Cabinet Office minister Ed Miliband.
Hayday told Regeneration & Renewal that the bank will offer investors a “Yorkshire bond” which could enable up to £50 million in loan finance to be made available to social enterprises and charities, many of whom high street banks refuse to assist.
The 12-month investment bond will offer interest rates of two to four per cent, depending on how much firms invest, he said. The cash will then be used to finance the expansion and development of social enterprises and charities in Yorkshire and the Humber.
“The money will be made available to community organisations,” said Hayday. “Investors will get a certificate acknowledging their contribution and a report twice a year detailing the way their money is working within the region.”
Hayday, who was speaking to Regeneration & Renewal at Footsey 100, a leading social enterprise trade fair, said: “We’ve already seen a significant increase in third sector interest in loan finance within the region and we’ve only been here a short period of time. But this is the first opportunity to be proactive and actually say (to social entrepreneurs): ‘you’re doing fantastic work, have you thought of expanding?’ It’s a range of support services, not just money.”
Regional development agency Yorkshire Forward has already invested £10 million in the regional branch of Charity Bank. Helen Thomson, the agency’s head of economic inclusion, said the bank would offer an alternative “financial mechanism” to support the third sector as European funding wound down.
The agency is also helping to set up an “Investment Readiness” programme to help organisations to be financially prepared and organised to receive loans, she added.