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Social Enterprise West Midlands is a growing network of over 400 members involved in the social enterprise sector in the West Midlands. We offer free membership which gives you access to a number of benefits. Full details including an online application form are available in the Join Us section. Should you have any membership enquiries please call us on 0845 450 7515.

Business finance

Seeking Finance? The type of finance you can access depends on your legal structure, what it will be used for, and may be affected by where you work or who you work with.

Types of Finance Available

Grants are usually provided for specific purposes, either for service delivery or organisational development, and spending and activity is often controlled by the use of a service level agreement.  Some grant providers will fund organisations on a more general basis but this seems to be becoming much less common.

Loans are the most common form of borrowing for all types of businesses and many social enterprises will use loan finance during their life.  Different lenders look for different risk profiles in the organisations they will lend to, some always require assets to be secured against sums borrowed while others may lend against a business plan or contract and many predominantly lend against capital purchases (buildings or equipment for example).  Lenders may also take very different approaches depending on the legal structure of the organisation.

Risk Finance refers to investment in organisations where the return on the investment is uncertain – most people are now familiar with Dragon’s Den where investors offer a sum of money in return for a percentage of the business, often offering other forms of support alongside the cash sum.  Buying 50% of a business for £100,000 and helping grow it to the point where it is worth £2,000,000 is a classic equity investment, with both partners benefitting.  There are restrictions and limits on this type of investment and the returns that investors can take for a number of legal forms commonly adopted by social enterprises, including charities, charitable companies and CICs limited by guarantee.  Some lenders offer “quasi-equity” packages whereby they offer a loan with minimum and maximum repayment sums based on performance, and there are many other models and solutions.

Investment Finance is support and advice provided to social enterprises looking to raise finance for growth.

Helping you find social investors Our database contains links to providers who cater for social enterprises with financial products and services tailored for organisations trading for more than profit.  Some of the larger grant providers with a particular interest in supporting social enterprise are included, together with a number of organisations who specialise in keeping track of grant programmes.  Many district councils maintain a list of available grants and are a good first point of reference.

Help Investors to help you. Taking the time to understand what lenders offer and what they require in return is an essential investment before seeking other’s investment in your social enterprise.

© Social Enterprise West Midlands 2014, Birmingham Enterprise Centre, 1st Floor Cobalt Square, 85-89 Hagley Road, Birmingham, B16 8QG, Tel: 0845 450 7515