An Oxford University college has negotiated a £10m loan from the Co-operative Bank to help finance further student accommodation.

Lincoln College, which was founded in Turl Street in 1427 and has 260 undegraduate and 180 postgraduate students, is seeking to buy and refurbish another building in Oxford to accommodate up to 40 more students.

Bursar Tim Knowles said: “We have a building in our sights but it is still too early to give any details. All I can say is that it is not a large Victorian house in North Oxford of the kind that some other colleges have turned into annexes.”

The Oxford Corporate Banking Centre (CBC) of the Co-op Bank agreed the finance with Lincoln College in a move which it sees as strengthening its links with Oxford University.

Steve Bateman, senior development officer at the Oxford CBC said: “Lincoln College is a prestigious new customer for us and we are delighted to be able to provide the funding for the wide-ranging plans of the college.”

The bank has already provided similar facilities for Somerville College and St Peter’s College.

Mr Knowles added: “It was the flexibility of the loan, worth up to £10m, from the Co-operative Bank that will be useful for us. For instance we are expanding and improving lecture rooms and meeting rooms, to be paid for by donations. But we might have to use this loan too.”

Fellows of Lincoln College, one of the oldest of Oxford’s 36 constituent colleges, include author John le Carré and pentathlete Stephanie Cook, who won a gold medal at the Sydney Olympics.