Sir Stephen Bubb has said the new state bank for small and mid-sized businesses should provide a ring-fenced fund giving out loans to the charity sector.

The new government-backed bank, which was confirmed by business secretary Vince Cable at last week's Liberal Democrat party conference, will be a wholesaler and provide capital for banks and other financial institutions to provide loans and other finance to SMEs.

In a letter to minister for the Cabinet Office Francis Maude and minister for civil society Nick Hurd, Sir Stephen - chief executive of Acevo - warns that banks are often difficult to access for the charity sector, and calls for a ring-fenced fund from the bank to provide loans for charities. 

Sir Stephen cites data from Social Investment Business in the letter, which finds that many civil society organisations cannot access finance, but would like to take a loan or another form of repayable finance. 

"Big Society Capital is providing a welcome injection of capital into the market but is not structured to provide simple loans into the sector quickly and at scale," he says in the letter. "Lenders who are willing to make straightforward loans are few and far between. It's time the government acted. We need access to loans so that we can step up to the challenges we all face." 

The Social Investment Business (SIB) is currently surveying third sector organisations including its investees and potential investees. Of the 188 current respondents, 169 have financing needs in order to grow. Their total demand for finance is Most of these cannot access finance yet more than 70 per cent would take a loan or another form of repayable finance. Many of those surveyed also want to expand into public service delivery.  

Last month, Sir Stephen also called on the government to use the £28m in loan repayments accrued by the now closed Futurebuilders fund, for more loans to the social sector.