Loan finance

Where there is a clear future income stream loans are often the best form of finance. There are distinct forms of lending within the social economy that include saving and lending circles, but much of the loans now being made for social ventures are coming from specialised social finance organisations, sometimes seeking security (usually from property) and sometimes lending against contracts. There are different loan finance options depending on organisational form (for charities, Community Interest Companies, spinouts, private firms). They include loans for working capital; capital acquisition loans (e.g. property); risk capital (e.g. underwriting fund-raising efforts, or seeking new contracts); factoring – linked to contract values; and loan guarantees (unsecured) – 70-85% guarantees typically. Loan provision for social projects is now a reasonably mature industry in many countries with typical unit scales from £25k-£500k.