Social Investment Business

On a mission

How brokers are helping to create fairer communities

Rob Benfield Director of Investments Social Investment Business

Overcoming an aversion to taking on debt is a big askfor charities and social enterprises which have traditionally used grants and other channels to access the funding they need to operate and grow. But COVID-19 changed their outlook. Almost forced into exploring alternative sources, many took advantage of the Bounce Back Loan Scheme (BBLS) and other government initiatives designed to support businesses and organisations with finance which would help them survive the unchartered waters brought about by the pandemic.

Now, this enhanced awareness and understanding of the utilisation of debt is driving greater demand across the third sector. And that’s where Social Investment Business (SIB) comes in. With a mission to provide finance to help create fairer communities, we specialise in helping organisations become more resilient and sustainable, so they are in the best place to grow and increase their impact.

SIB has a 20-year track record in social investment, grants and business support programmes, and in data analysis, having invested and distributed almost £0.5 billion in finance to well over 3,000 charities, social enterprises, and community businesses across the UK.

Like many other lenders, the past couple of years have been exceptionally busy for SIB, as we mobilised at pace to respond to the impact of the pandemic. Now, we have more than £100 million under management across grants and loans, including £39 million disbursed in the year just gone.

Building resilience to support the recovery

We are acutely aware that the pandemic has exacerbated inequalities with some places and communities having been hit harder than others. As social investors, we need to ensure that our funding is reaching the areas of greatest need. So, in 2020, SIB launched the Recovery Loan Fund making over £21 million in repayable finance available to charities and social enterprises alongside groups and communities that have previously been unable to access funding.

“SIB’s average loan size is around £250,000 although we will lend up to a maximum of £1.5 million with the loan being unsecured or ‘lightly’ secured

This fund aims to make the government’s Recovery Loan Scheme (RLS), more accessible to charities and social enterprises which have been impacted by COVID-19 and need funds to aid recovery, adapt and grow – allowing them to continue to serve their communities in need.

This fund builds on the successes of our previous offering, the Resilience and Recovery Loan Fund (RRLF) which closed in March 2021. RRLF approved £28 million in total funding to 77 charities and social enterprises across the UK, with £24 million worth of loans and over £3.9 million worth of grants approved.

Through our own data and learning, we have found that black and minority-led social enterprises in particular face structural barriers in accessing finance. We are therefore expanding the Recovery Loan Fund with a forthcoming initiative that will change eligibility criteria and deploy significant grant blends, work with expert partners, and provide tailored support. This will help to widen accessibility and prioritise groups that have been historically and systemically excluded from social investment.

How SIB works with brokers

Although historically SIB generated new funding opportunities solely through referrals from social sector membership bodies and its own networks within the sector, more recently we have witnessed an increasing number of commercial finance brokers requesting to work with us. Through engagement, we have discovered that brokers are looking to enable funding to charities and enterprises in order to help deliver critical services in their local communities. To meet this demand, SIB became Patrons of the NACFB and launched a broker proposition that pays commission on all loans that are advanced and where each commercial finance broker has direct access to a dedicated SIB account manager.

How a typical funding deal works

SIB’s average loan size is around £250,000 although we will lend up to a maximum of £1.5 million with the loan being unsecured or ‘lightly’ secured. Applications are assessed by a specialist relationship manager and loan approvals are then made by the investment committee which meets monthly.

Once approved, full loan documentation goes out to the customer using DocuSign ready for them to execute. All due diligence, AML and KYC checks are undertaken electronically. Funds are generally paid out in a single lump sum.

Next steps

Social investment has an important role to play in supporting people and places through the post-COVID recovery and beyond. We have an opportunity to create a more inclusive economy, underpinned by impact-led organisations and social businesses that provide good jobs, improve living standards, and ultimately create a more equal society. We stand ready to work with government, you the NACFB membership, and the wider social enterprise movement to unlock the transformational impact that we can have on the economy and society together.