Unity Trust Bank | Big Society Capital

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Unity Trust Bank

A £3m investment into Unity Trust Bank to provide additional capital to support the growth in its lending portfolio to its core charity and social enterprise customer segments

Social impact

While charities, social enterprises and other SME’s increasingly wish or need to borrow money in pursuit of their mission, they can struggle to obtain affordable and simple loans. Often these organisations also find that conventional providers of finance do not understand the motivations and funding streams of an organisation working towards a social mission.

Unity Trust Bank, an independent bank with a social conscience, is an experienced lender to these organisations who form their core customer lending base and has been pursuing a “double bottom-line” approach to all it does since its inception in 1984. By growing the amount of capital Unity holds, it is able to significantly increase the amount of lending available to organisations looking to improve or further expand a proven model.

Financial rationale

Unity Trust Bank has a track record of prudent lending to its core customer base, which has led to a low default rate of loans. The double bottom-line approach, focussing on the social as well as economic benefit, means that both these elements will be achieved in lockstep. While the benefits of increased lending will be felt immediately, over the medium-term this will continue to bring increasing value both to its immediate shareholders, and to a wider group including its customers and the communities they serve.

Market development

Our investment into Unity seeks to develop the social investment market in a number of key ways. First, it supports a key existing and experienced lender within the social investment market. Second, it helps to ensure that significant extra capital is available to lend, multiplying the impact our money is able to have for their core customers. Third, ensuring there are several, strong and flourishing banks with this focus helps to provide an increasingly differentiated and competitive market in which charities and social enterprises can have greater choice of lenders. Fourth and finally, being a partner with Unity will provide opportunities to share some of their social investment lessons, stories, and how their customers are creating impact.

Investment details

  • Strategy strand: Finance for small and medium-sized charities and social enterprises
  • Total investment: £3,000,000 equity
  • Co-investors: Combination of existing Trade Union shareholders and new shareholders including a number of cooperatives
Last updated | 
14 February 2017