Social Investment FAQs
Answering your most common questions about working with SIS.
Types of investment explained:
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Type of investment explained:
Understanding the different types of funding available is essential for social enterprises, charities, and community organisations looking to grow their impact.
From repayable social investment to blended finance and grants, each option has its own benefits, risks, and suitability depending on your organisation’s needs.
Below, we explain the key types of investment and funding to help you determine which might be the right fit for your goals.
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Social Investment
Social investment involves using repayable finance to help social enterprises, charities and community groups to achieve social goals. These organisations can use this finance to grow their impact by expanding their business, providing working capital, or purchasing assets. Similar to traditional borrowing from a high street bank, social investment is typically repaid with interest, using the surplus generated from trading activities, contracts, or grants.
Organisations might need social investment for several reasons:
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Kick-starting a new venture: Social entrepreneurs with innovative ideas or existing organisations looking to start new projects may need initial funding.
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Scaling operations: To increase their impact, organisations might need funds for product development, marketing, systems, or staffing.
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Sustainability: Social investment can help organisations become financially sustainable while achieving their social missions.
However, social investment is not suitable for everyone and should be considered alongside other funding options. It's crucial to evaluate the costs, repayment models, and the level of involvement desired from investors.
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Blended Finance
Blended finance combines grants and loans to support organisations. This method is particularly useful for new organisations that need initial grant funding to reach a stage where they can take on and repay investments. It also benefits existing organisations looking to expand but whose new activities may not generate enough profit to repay an investment without some grant support.
Blended finance can be sourced from specialist social investors or grant-making trusts. Organisations can also create their own blended finance packages by applying for grants alongside loans. This approach bridges the gap between grant funding and investment, reducing the risk of being unable to repay the investment.
An example of blended finance could be a grant of £20,000 alongside a loan of £50,000 that needs to be repaid over five years with 10% interest.
However, blended finance is not widely available and is typically limited to investments of £250,000 or less.
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Grants
Grants are often purpose-specific, designated for a particular project or piece of work, and come with associated terms and conditions. These project-specific grants are typically classified as restricted funding, meaning the money can only be used for the specified project. However, grants for core funding (unrestricted funds) are also available, though they are increasingly rare. Unrestricted funding grants provide charities with greater control, allowing social enterprise leaders to make informed decisions on how best to use the funds.
Grants are issued by government, large corporations, foundations, educational institutions, and more. Both the application and approval processes can be onerous, and even once an application has been approved, it can take considerable time to receive funds. Grants tend to be larger sums of money, supporting significant projects, future initiatives, and ambitions. However, securing a grant requires time, energy, and expert grant-writing skills.
FAQs
We have no application forms for you to complete. We’d much rather have a conversation to understand what you do, your impact, and the project you're looking for us to help you with.
As a responsible lender, however, we would look for details of what the money is for and some financial projections/information that demonstrates the loan is affordable and won't put any financial strain on your organisation.
Watch our videoYes, and we often do provide support to buy property. Our funding is unrestricted and can be used for many different purposes aligned with your organisation's impact and sustainability ambitions.
Watch our videoSIS is lending to the organisation/legal entity therefore there would be no financial liability for any SIS investment. Our decision to lend is based on the organisation's ability to repay the loan, not the Trustees.
We do not take Personal Guarantees from the management team/Directors. We may still look to take security but this would be based on the organisation’s assets, not individuals.
Watch our videoWe always try to offer our lowest interest rate possible. Interest rates are based on risk with more riskier projects having a slightly higher interest rate. If we can obtain security, over an asset, for example, this would be reflected in the interest rate charged.
All SIS interest rates are fixed for the full term of the loan giving you and your organisation certainty of costs for the long term.
Watch our videoIdeally, we want to have a conversation with you and understand your organisation and what you are planning to do. From there we would ask for the sort of information your Board are likely to ask to support the project.
These documents may be:
- A (short) business plan/executive summary of the project you want to undertake;
- Your key assumptions in achieving the goals of your plan, feeding into;
- The financial projections that demonstrate the activity is the right thing to do for your organisation and the community you serve;
- We may ask for other details such as information about the skills and composition of your leadership team and Board, historical financial information, and anything else that might support your application.
Watch our video