Sources of social investment or loan finance

Signposts to loan finance for the Voluntary and Community Sector

• National loan providers
• Regional loan providers
• Funder loan finance schemes
• Loan finance for social enterprise activity

Voluntary and community organisations interested in loan finance and which are at the right stage in their lifecycle to manage a loan should initially consult commercial high street lenders, or consider the national loan providers listed below. The other schemes listed are suitable for organisations unable to access loans from the conventional banking system or that are interested in developing social enterprise activity.

The Community Development Finance Association (CDFA) has a handy Finding Finance directory on its website, where you can search for finance by UK region.

The Co-operative Assistance Network Limited website has details of training and resources in raising finance for your business. This is geared towards co-operatives, but is generally useful for other organisations considering how to finance social enterprise activity.

National loan providers

Charity Bank  is unique in being registered as a bank with the Financial Services Authority and also as a charity with the Charity Commission. Charity Bank has particular experience in supporting groups wanting to buy premises from which to operate and from which to develop a sustainable income stream.

Triodos Bank lends exclusively to charities, business and community enterprises with clear environmental and social objectives. Their products include term loans, working capital loans, overdrafts, bank guarantees and other forms of credit facility. Each application is assessed on a case-by-case basis using their knowledge and understanding of these types of enterprises.

Unity Trust Bank specialises in providing membership and banking services to trade union, charity, voluntary, credit union, and membership organisation sectors.

CAF Venturesome (part of the Charities Aid Foundation) is a social investment fund that provides investment to help charities and social enterprises deliver on their mission. They work with charities in order to understand what type of finance is suitable for each individual case.

The Adventure Capital Fund helps voluntary and community groups in England become sustainable by generating income from trading. They are in effect the social enterprise counterpart to Futurebuilders. Adventure Capital provides tailored finance to support trading activity while Futurebuilders provides tailored finance to support public service delivery.

BIGinvest is a large loan fund set up by The Big Issue. It has been formed to help create social impact by investing in the sustainability of the not-for-profit sector, local communities and social enterprises. The fund is focusing on the purchasing, renovation and development of property to help achieve this.

The Co-operative Bank offers flexible loan finance to charities and voluntary organisations to meet a variety of requirements from the financing of property or business equipment to improving cash flow. Each finance application is assessed individually, using expert knowledge of the sector to ensure that the best solution is provided to customers.

Regional loan providers

The majority of Community Development Finance Institutions (CDFIs) operate regionally. The Directory of CDFIs who are members of the Community Development Finance Association is the best starting place to find out what's available and how to contact them. Two well established examples are:

London Rebuilding Society provides financial support and advice to voluntary organisations, charities and community groups pursuing social enterprise activity across London. These may be co-ops, social firms, or the trading arms of charities. Potential recipients must be putting people before profit and have viable plans for the future. The Mutual Aid Fund is specifically aimed at voluntary organisations and offers a number of training courses designed to help organisations develop income generation activity.

Aston Reinvestment Trust provides loans to Birmingham and North Solihull based small businesses and social enterprises including voluntary and community organisations that are unable to access finance from banks in full or part.

Funder loan finance schemes

Esmeé Fairbairn Foundation's Finance Fund offers finance to projects or organisations that can demonstrate the need for investment and the capacity to manage the demands of non-grant funding. Arrangements could include loans, guarantees, equity or quasi-equity finance. This  builds upon a successful pilot programme which explored alternative opportunities to grant finance in the voluntary sector.

Loan finance for social enterprise activity

The Social Enterprise Loan Fund (which replaces the Local Investment Fund) provides loans to social and community enterprises for between £25,000 and £250,000 all across the country. There are also Regional Community Investment Funds offering slightly lower amounts.

The Small Firms Loan Guarantee Scheme guarantees loans from banks and other financial institutions for small businesses with viable business proposals that have tried and failed to obtain a conventional loan because of a lack of security. Suitable for voluntary and community organisations wanting to finance trading activity or property purchase that have set-up or registered their trading arm as a company limited by guarantee.

Industrial Common Ownership Finance has been providing loan finance for co-operatives, employee owned businesses and social enterprises for 30 years. Launched in 1994, their Community Capital Fund loans to all types of social enterprise, from community businesses to charity trading subsidiaries.  Loans are available for property, equipment and bridging loans against delayed grant payments.