Please review the questions and answers below to familiarize yourself with Vital Loans. If you are considering applying for a Vital Loan, be sure to review the Vital Loans Eligibility Checklist.

  • What is “Vital Loans”?

    Vital Loans is a joint initiative between the Victoria Foundation and Island Savings, aimed at providing financial support in the form of loans to registered charities on Vancouver Island (Nanaimo and south) and the Gulf Islands.

  • Are Vital Loans the same as business loans?

    No. Vital Loans combines the Victoria Foundation’s unique knowledge of the community – and the charities within it – with Island Savings’ financial expertise and understanding of the local economy. This is different than a conventional loan from a bank or other lending agency; however, it doesn’t mean that Vital Loans will not employ the same level of rigour in accessing applications for financing. We are intent on seeing each loan repaid according to the agreed-upon terms. We will take into consideration several factors, including: a proven management track record, sound financial leadership, financial need, project quality and the ability to repay the loan.

  • How much can be borrowed?

    Right now, Vital Loan amounts will range from $20,000 to $500,000. This may change as the program matures.

  • Can the money be borrowed in the form of a line of credit?

    Yes! Several applicants have successfully used a line of credit as part of the Vital Loan program. This form of borrowing can be a convenient and advantageous way of accessing funds and paying for expenses that do not get incurred all at one time.

  • Would you consider a larger request?

    Perhaps. It would depend, however, on the application and term. Contact us to discuss your specific needs.

  • Are there restrictions or limitations as to what the borrowed money can be used for?

    The Vital Loans Eligibility Checklist provides information on restrictions and limitations. If you have any doubt that your application may not qualify, contact us for assistance.

  • When can we apply?

    Whenever you are ready! There are no application deadlines and applications will be reviewed as they are received.

  • How long will it take for you to review my application?

    We will assess applications as received. A process is being established to review applications on a monthly basis until we can better measure the demand. Because each application is unique, processing times will vary, but the strength of your application will be one of the biggest factors. We will thoroughly review your application, your organization and the management team behind it. If we are satisfied that all the information is complete, reliable and acceptable, you will receive an approval letter from us. If, however, we are not satisfied with the application, processing can take longer than normal.

  • Will you share information in my application?

    All information we receive will be kept confidential and shared internally at the Victoria Foundation and Island Savings for the purposes of assessing and administering your loan request. Your personal and/or organization’s consent will be required if the Victoria Foundation or Island Savings requires any relevant information from third parties for these purposes.

  • Our organization is not a member of Island Savings; is becoming a member a prerequisite for obtaining a loan?

    Yes. While you are not required to be a member to apply for a Vital Loan, if your application is approved, your organization will be required to establish a membership at Island Savings before funds can be released.

  • What are the payback terms?

    Terms will vary depending on the nature of the loan request. Initially, loans will have a maximum maturity of 36 months and may require annual renewal.

  • How much interest do you charge?

    Typically, rates will be below that of a normal commercial lender, but may vary depending on the evaluation of the specific loan. The benchmark rate is prime plus two percent and will be set up or down depending on the strength of the application. Prime rate is variable.

  • How is the interest paid?

    Depending on the nature of the loan, interest could be paid monthly, quarterly or in some cases at the maturity of the loan.

  • Does the loan need to be insured?

    No, loans are made based on the strength of the application and track record of the borrowing organization. Personal indemnity is not generally required from Directors or others at your organization.

  • Would you consider a second mortgage or some other form of subordinate debt financing?

    Yes, but it would depend on the financial security and strength of the borrowing organization, and the reason for the loan.

  • Do organizations have to be located in the Victoria area to be eligible to apply for a loan?

    No. Organizations can be located on Vancouver Island (Nanaimo and south) or the Southern Gulf Islands.

  • Why are you offering this service?

    Both the Victoria Foundation and Island Savings are interested in building on their community support success. We are also hearing that some registered charities are experiencing challenges in obtaining funds through traditional lending requirements and we want to provide another form of assistance to the community.

  • Who profits from the loans?

    The community will profit the most from our Vital Lending philosophy, as financing will be made available for projects that may otherwise not be funded. Island Savings will use the interest earned on Vital Loans to help cover administrative costs of the program. Repaid loans will be recycled back into the fund for further loans.

  • Where does the money come from?

    Both Island Savings and the Victoria Foundation will contribute to create the initial fund. Monies from the Victoria Foundation will come from donors who want to see their gifts used to expand financing options for the community beyond traditional granting.

  • How big is the fund?

    The initial fund will be $4.5 million. We would like to reach $20 million within a few years, but that will depend on the success of the fund to attract both donors and borrowers.

  • Does this mean the Victoria Foundation will be granting less in the future?

    No. Vital Loans is an additional program which has been developed to provide qualified community charities with another financing option.

  • Why not simply continue to give grants rather than lend money?

    Vital Loans are designed to provide financing specific to a project or initiative which may not be undertaken in the normal course of business or that may not qualify for a grant.

  • Is Vital Lending new to Canadian community foundations?

    The names “Vital Lending” and “Vital Loans” are specific to the Victoria Foundation and Island Savings; however, the concept is not new and goes by several names, such as “Mission Based Investing”, “Community Investing”, etc. A few other community foundations have started similar initiatives but no two foundations operate their fund in the same manner.

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