An investment that works like a mortgage on a house. An investor provides your organisation with a loan against an asset (often a building or equipment) as ‘collateral’. Alternatively, an organisation's parent company may offer its shares in the organisation as the collateral. You repay the loan on an agreed basis (e.g. regular monthly payments) usually with interest on top.
When might I use it?
To cover some or all of the cost of buying the asset. For example, your organisation’s office building, a community asset such as a community centre, or expensive equipment such as a bus.
Where can I get it from?
Secured loans are available from social banks but may also be available from high street banks. Foundations and individual social investors might also make secured loans.
Browse our investors and advisers page to view organisations offering secured loans.
Pros
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Interest rates likely to be lower than unsecured loans
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Common form of investment
Cons
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If you don’t repay the loan, the investor may have the right to take possession of the asset and sell it to recover the debt
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Not available if you don’t own a building or another large asset or have a parent entity willing to offer its shares in an organisation as collateral
More information
- Know How Non-Profit - Secured loan
- Example case study - London Early Years Foundation (LEYF)