Social Investment Loans
Seeking a Social Investment Loan is another way of securing finance for your business. Unlike a grant, this is repayable, typically with interest.
Although loan finance is not a substitute for grant funding, it can play an important role within your funding profile and can help you to develop your project.
Social investors play a particular role in financing community businesses and other social enterprises. They balance financial returns (repayment of the original capital sum with interest) with social returns (helping the investee to reach more disadvantaged people and generate stronger social impact).
Many social investors require ‘collateral’, i.e. security for the loan in the event that there is a default on repayment. However, in recognition of the fact that a lot of community groups don’t own assets, some social lenders will provide unsecured loans.
Good Finance
A handy website created to provide charities and social enterprises with information about different funding options. It's a great first-stop for any charity or social enterprise that is new to social finance and wants to understand the basics.
Responsible Finance
There is a lot of information on this sector from Responsible Finance, the membership body for responsible lenders that make fair and affordable loans across the UK (formerly the Community Development Finance Association). They have a great educational tool that allows you to search for available finance provision in your area.
Some social investors offer what is called ‘blended’ finance, which is a mixture of grant and loan.
It is worth being aware of the term and asking potential investors if it is something they offer.
