Creating an ‘opportunity fund’ with a Charity Bank loan

“With some funders, what you hear is, ‘We don’t really do that.’ With Charity Bank, it’s, ‘We can see what you’re trying to achieve. Let’s see if there’s a way we can make it happen.’” Linda Wallace, Chief Executive of PHA Homes, talks about her experience of getting a loan from Charity Bank.

You bought 11 new homes with the help of a £2 million Charity Bank loan. Can you tell us about them?

They’re high-quality flats that were originally built for private sale. The flats are right in the centre of Petersfield, which is officially one of the best places to live in the UK*. At PHA, we believe that you shouldn’t be able to differentiate social housing from any other type of housing, and this is a really good example of that intention.

You’ve now had another loan agreed, for £3 million. What are your plans for that money?

It’s basically a revolving credit facility to give us operational freedom, allowing us to react quickly to opportunities. That might mean new homes, but it might mean other things too.

While we only have 350 homes, we’re an important part of the fabric of this community.  We want the work that we do to make this place more connected and more resilient and we are looking at how we can do that by collaborating with and supporting the network of non-profits and charities that work around us. It’s about saying, “Where do the circles overlap? How can we work together?  Are we able to amplify existing good work rather than try to duplicate it?  What can we bring to the table to make your job easier, and therefore allow you to add value to our residents and other local people?”

For example, our local Men’s Shed are looking to relocate premises. Is there a way we can help to make that easier? That might just mean attending their funding discussions, which are more familiar to us than to them, or it might mean buying a commercial space and leasing it to them.

This ‘opportunity fund’ allows us to confidently have conversations knowing that we can respond quickly and add the most value where it’s needed.

One of the differences in dealing with Charity Bank compared to other lenders, is the speed with which they understood that concept of using our strength to enable others to do good work. I had some trepidation going into other funding meetings, thinking, “Will anyone understand what I’m talking about? I feel really passionate about this stuff, but will they get it?” From the minute we started talking about it, Charity Bank understood what we were trying to do. It was just such a relief to talk to them.

Were you keen to have a partnership with your lender, rather than just the traditional lender/borrower relationship?

Completely – to the point where we put partnership  as a key requirement in our funding memorandum. That was for two reasons. One is that we needed an organisation that could understand our intention and make sense of why we wanted the money.

Secondly, the kinds of opportunities that might come forward could be on the boundary of what we’d normally do. With some funders, what you hear is, “We don’t really do that.” With Charity Bank, it’s, “We can see what you’re trying to achieve. Let’s see if there’s a way we can make it happen.”

You can find yourself contracting mission to fit with what some lenders find easy to fund. Charity Bank make us feel expansive because we can be who we are and lean into our mission as opposed to trying to fit into a straitjacket of doing things a certain way.

My head of finance came to all the funding meetings for the latest loan, and she was blown away by the difference between Charity Bank and the other lenders.

Do you feel that you’ve been able to build proper relationships with the people you interact with at Charity Bank?

Yes. Even with our other values-based lenders, it’s never felt ever as easy as with Charity Bank. There’s a sense of openness; you’re less guarded. We don’t have anything to hide, but I’ve been in other funding meetings where I’m slightly wary of inadvertently saying something ‘wrong’.  I’ve never felt that with Charity Bank.

I genuinely look forward to our conversations, and I’ve never had one where Charity Bank didn’t add value. The people there are often personally involved in other things that have a social impact. It’s really useful to be able to say, “Can we talk through the risk aspects of this? What have you seen with other projects that you’ve been involved in?”

And it all feels consistent across their team. We mainly deal with Carolyn and Bernie, who are amazing, but we also have confidence that this open approach is a business operating model. I’ve never felt like that with any other funder.

How do you find the practicalities of working with Charity Bank?

They’re really easy to work with. You can get hold of people and they’re very responsive. Fundraising is a big thing for us – it stretches our capacity and we’re often paying a lot in fees, so being able to talk to someone and get a quick response is really important.

Documentation-wise, it’s always straightforward. There’s as little legalese as possible, which is not true of all lenders! And if you ask a straight question, you get a straight answer, which I appreciate.

We are extremely happy with Charity Bank. There’s flexibility and understanding and reactiveness and pragmatism.

You mentioned that you spoke to other lenders for this newest credit facility?

Yes, we went out to six banks and got proposals from four. We hoped that Charity Bank would bid because we really like working with them. Thankfully, they came back with the best terms for us, and they were significantly ahead on the partnership element of our requirements

We also talked to our funding advisors about their experience working with Charity Bank elsewhere, and we had conversations in our network with people who have funding from Charity Bank.

We wanted two lenders, so we’ve split the lending between Charity Bank and Lloyds, which is another of our existing lenders.

Is there anything that housing associations should do when they’re preparing to apply for a loan from Charity Bank?
Tell your true story.

Most smaller organisations will have a funding advisor who will prepare you for the numbers, but your story, your intention and mission may not feel so important. Some funders just aren’t that interested in it. With Charity Bank, they want to know that you have a good mission and that you’ll honestly do something really good with the money.

I think it’s fair to say that you’d be happy to recommend Charity Bank…

They are super; we’re big fans!