Understanding the Financial Landscape for Social Enterprise
Monday, November 22, 2010
The Social Investment Business’ Sue Peters examines the impact changes in the funding, lending and investment markets are having on social enterprise
The financial climate for people running or setting up social enterprises is like that for business owners or any other entrepreneurs at the moment – the banks aren’t lending. Either finance isn’t available, or banks say the economic situation means they aren’t able to lend the amounts they used to.
We provide grants and loans from the funds we manage (Futurebuilders, Communitybuilders and the Social Enterprise Investment Fund) but we also work with traditional lenders, and other social investors leveraging in money from the private sector as much as possible to support bankable elements of projects we’re financing. So we’re in regular contact not just with people who apply to us for funding, but with other lenders too.
We’re seeing that where before banks would be prepared to offer mortgages for 75% of the value of a property, now they’re lending only 50 to 60%. Some are going as far as withdrawing from previous agreements or only doing high value deals. I know of one high street bank who has told us that they don’t feel they can get involved in any deal worth less than £500,000.