Funding Your Business

When starting a new business including social enterprise many entrepreneurs need to raise some finance to help them to realise their ambition.

This support often comes from family, friends or personal savings. Some businesses may require further help to establish themselves and may need to consider grant funding or loans.

Please note: Inspire2Enterprise does not provide funding.

What you need to think about…

Applying for finance

If you need to raise finance for your social enterprise then you need a robust and realistic business plan and ideally a 3 year cash flow forecast.

Your Business Plan will provide 90% of the information that you’ll need when speaking to a bank or other financial institution or when approaching a grant provider.

You will be able to confidently present the business case for the finance required.

Becoming sustainable

The ultimate goal of any business, be it a social enterprise or other, is to become sustainable.
The key to achieving this is in the research and planning your business – just a few tweaks to your plan can result in huge changes that can mean the difference between a sustainable business and one that struggles to stay afloat.

Research suggests that a large number of social enterprises still report a lack of access to funding and that finance is often a barrier to sustainability.
It’s therefore vital to know where to find investment opportunities and how to fill in what can be complex and time-consuming paperwork.
It’s likely that any grant funders will insist that you report and account for every penny you spend.

Loans and grants

If you are seeking a loan to enable your social enterprise to start or grow you could speak to your local banks in the first instance.

Charity Bank is an ethical bank that uses savings to make loans to charities and social enterprises:

https://charitybank.org/

You may also want to consider Start Up Loans. Start Up Loans are a subsidiary of the British Business Bank, providing Government-backed finance and support for businesses who struggle to access other forms of finance:

https://www.startuploans.co.uk/

The Start Up Loans website also provides guidance and a cash flow forecast template:

https://www.startuploans.co.uk/cash-flow-forecast-template/

Funding Central is specifically for third sector organisations looking for grants, loans and contracts and is free to register (if your business has an annual income of less than £100k):

http://www.fundingcentral.org.uk/

Funding Central lists funding and finance opportunities for charities, voluntary organisations and social enterprises that are registered in England. If you are registered outside England try:

The National Lottery Community Fund funds projects and activities that transform communities, protect our heritage, and enrich lives through arts, sports and culture.

https://www.tnlcommunityfund.org.uk

The Esmée Fairbairn Foundation aims to improve the quality of life for people and communities throughout the UK both now and in the future. They do this by funding the charitable work of organisations that are building an inclusive, creative and sustainable society.

https://esmeefairbairn.org.uk/home

UK Community Foundations network supports local projects on a range of issues, such as poverty alleviation; emergency crisis response; and youth engagement.

https://www.ukcommunityfoundations.org/about-us

Applying for grant funding

When researching the grant funding landscape it is vitally important that you check eligibility and terms & conditions of each grant fund. Some funds are only available to certain legal structures (e.g. CIC) others will stipulate what the money can be spent on. Thorough understanding will prevent wasted time and effort

Applying for grant funding can be a highly competitive field, with many other third sector organisations applying for the same funding.  You want to ensure that your application clearly demonstrates what your social enterprise does and that it meets the requirements outlined by the grant funders for the particular grant you are applying for.

It may be useful to visit https://communityinterestcompanies.blog.gov.uk/2017/10/19/thinking-of-applying-for-funding-some-tips-and-guidance-to-give-you-the-maximum-chance-of-success/ for guidance on making grant applications (although this is written specifically from the perspective of a CIC the advice is widely transferable throughout the social enterprise sector).

You may want to consider other ways of raising finance:

  • Crowdfunding
  • Peer-to-peer lending
  • Contracts and partnerships

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