Social enterprise report | RBS Invoice Finance

Social enterprises in need of more working capital

  • Report says UK's social enterprises lack working capital
  • Figures have risen sharply since 2011

Social enterprises are increasingly seeking more working capital, claims a report by Social Enterprise UK (SEUK) and the Access Foundation.

Prospecting the future: social enterprise and data from 2011-2015 states that in 2011, 28% of UK social enterprises needed access to working capital for their day-to-day operations. This figure rose sharply to 35% in 2013 and 43% in 2015. 

Working capital is calculated by taking away current liabilities from the company’s assets. Businesses often need access to more working capital as demands fluctuate. Invoice financing is one method companies use to release working capital. This enables businesses to borrow money against as-of-yet unpaid sales invoices.

The median amount of financing raised by UK social enterprises remained steady over four years at around £60,000. In deprived areas (particularly in the North), the average amount applied for was £90,000. A minority of charitable organisations still relied upon grants rather than finance to help supplement their income.

Peter Holbrook, the chief executive officer for SEUK: 

"Research shows that access to finance has always been an important issue for social enterprises. It's a key barriers for those starting-up and seeking to grow.

"This report delves deeper into finance data to identify trends over the last few years in different regions and sectors. This helps us understand the finance needs of social enterprises in more depth and could inform the design of social investment programmes and initiatives."

Seb Elsworth, the chief executive officer of Access:

"This report adds further weight to the case that social enterprises need access to smaller loans and blends of loans and grants which can help them to grow.

"The role of Access is to make sure that more of the right size and type of finance is available. We are open to expressions of interest from organisations who want to provide this sort of finance to social enterprises."

 

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