Access to finance: challenging social investors to think differently

In a guest blog for Good Finance UK, Lucy explores common barriers to accessing finance, including her own lived experience as founding Managing Director of Social Enterprise Mark CIC, and challenges social investors to escape the ‘business-as-usual’ approach that enables inequity.

Time and again access to finance comes out as the number one barrier to growth for social enterprises.

In this post, I want to drill down into what we mean by the terms ‘access to finance’ and how social investors can provide more flexible, accessible solutions.

In my research for this blog, I investigated the data that originates from the State of Social Enterprise Report in 2021 (SEUK). Interestingly, the effects of Covid and the economic crisis have reduced access to debt and equity finance (social finance) as a barrier to growth from 18% in 2019 to 6% in 2021.

The much larger barriers to growth were:

·       72%: Operational issues e.g. accessing customers,
·       61%: Economic factors such as cash flow
·       36%: Financial reasons e.g. grants.

Does this mean that social finance becomes largely irrelevant in times of crisis?  Even more so when we see the eye watering interest rate rises that are likely to see over the next year.

My thoughts are that this is not the case. However, we must see social finance within the wider context of pressures facing social enterprises and, as with any product/service, it needs to adapt, and provide flexible and hybrid products. In tandem, we also need to see social enterprises acting with a social value/sustainability head on rather than acting like corporates in their growth ambitions.

Continue reading Lucy’s blog on the Good Finance website.