Changing a financial model with a loan

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Burnhams Surgery recently moved into its new home with the help of a specially set up CIO, two endowments and an ethical loan from Charity Bank. The CIO was struggling to get a loan from another provider, as trustee Malcolm Bailey explains.

Why did you approach Charity Bank for the loan?

The developer for the new surgery, Medcentres, specialises in health and social care premises. They were trying to sort the finance out for us through one of the big clearing banks but not getting anywhere. So, we explored various alternatives, including having extensive dealings with a couple of the other major banks. Eventually, it became clear that the banks just weren’t interested in us. Then Medcentres said, “Have you tried Charity Bank?”

And did you have a different experience with Charity Bank?

Charity Bank was a breath of fresh air. They were very responsive. We'd had such a depressing series of interactions with other banks. Even just trying to open a bank account was like pulling teeth – it was awful. So we were feeling fairly dejected and cynical, but we had a completely different experience with Charity Bank. We could actually talk to a real person and didn't have to go through a whole host of online stuff or leave messages on answerphones that no one would ever respond to.

So you found it useful to have a single point of contact?
We have three primary contacts. At the start, we mainly spoke to Carolyn Sims, the Director of Lending. She was our initial point of contact and very helpful. Once she got her mind around the proposals, she said Charity Bank would be very keen to help us. Adam Ruffinato then came onboard and did most of the legwork to get us through the application process. And then Sharon Gooch in Lending Services did the real spade work, pulling all the documentation together and steering us through that. So those were the three main people we dealt with, and they were all great. There were lots of phone calls, lots of Zoom calls, but all carried out with good humour. And we almost looked forward to calling them and having a chat, which isn’t always the case with bankers!

Did you come up against any challenges?
We had an open dialogue with Charity Bank and kept them posted on where we were in the process. They were very understanding and were able to extend the deadline several times.

As a small, new charity, the only funds we had were the legacies, and we couldn't actually get our hands on those until we had a bank account. We didn't have any other sources of income. And as the process went on, we realised we needed extra money for the build, so we had to go back to Charity Bank a couple of times to increase the loan amount.

Those changes had to go through certain processes in Charity Bank to get approval, but the team were really helpful in steering us through and we didn’t have to do a whole raft of additional work. While Charity Bank was very thorough in terms of the documentation that was needed, they were also pragmatic and understanding, which was very refreshing.

Was it more challenging applying for a loan as a new charity?

None of the trustees had been through this before. And as a retired accountant, I got dumped with all the finance discussions! Charity Bank made it palatable, and helped us through the difficulties, some of which were due to our naivety.

We had ups and downs with the developer and various issues caused by delays in getting a bank account. The timetables stretched and stretched and stretched. But Charity Bank were very supportive, including reassuring the developer but not bending over backwards to meet some of the developer’s more unrealistic requirements.

We always felt that Charity Bank was on our side – helping to support what we were trying to achieve.

What benefits will the new building bring?

As well as being larger and more modern, it’s enabled the surgery to change its financial model. Previously, when a GP retired, much of their pension pot was tied up in the surgery. And any new GP joining the practice would need to find a significant amount of money to ‘buy in’. As a result, it was becoming increasingly difficult to recruit new GPs.

The old building has now been sold and knocked down to be redeveloped into housing. That means the GPs could pay off their borrowings. The new building is owned by the charity and we’re responsible for the loan, not the GPs, which makes the practice much more attractive to new doctors. They don’t have to put their own money in or take on a loan.

We only completed the build in March 2022. The surgery has already agreed to take on the clients of a nearby practice whose single GP is retiring. And it’s recruited two new GPs, as well as additional nursing resource.

If you need a loan to help finance a new property, please call us on 01732 441919.

About Charity Bank

Charity Bank is the loans and savings bank owned by and committed to supporting the social sector. Since 2002, we have used our savers’ money to make more than 1,100 loans totalling over £400m to housing, education, social care, community and other social purpose organisations.

Find out more about us here.

Nothing in this article constitutes an invitation to engage in investment activity nor is it advice or a recommendation and professional advice should be taken before any course of action is pursued.