Funding options for social enterprises in the UK

Funding is one of the most common challenges social enterprises face as they grow. Many organisations are delivering strong impact, generating income and responding to real community needs but still find it difficult to identify and acquire the right type of funding at the right time.

The UK funding landscape can feel complex. Grants, loans and equity are often discussed separately, even though most organisations move between different types of funding as they develop. Understanding how these options fit together can help social enterprises make more confident, sustainable decisions.

This guide provides an overview of the main funding routes available to social enterprises in the UK and explains how Big Issue Invest fits into that wider picture.

Understanding the social enterprise funding landscape

Social enterprise funding is not one-size-fits-all. Different forms of finance support organisations at different stages, from early development through to long-term growth.

Bootstrapping

Nearly all social enterprises begin with some level of bootstrapping, where personal finances help get an idea or organisation off the ground. This is naturally limited by the resources available, so even early on it is important to consider more sustainable sources of funding.

Crowdfunding

Crowdfunding is another common route, particularly for community-focused initiatives. However, it can be highly dependent on visibility, reaching the right supporters, and the platform being used.

Grants

Grants from trusts, government, and foundations can be a strong fit for early-stage social impact organisations, but they are often highly competitive and rarely provide a sustainable long-term solution. They are typically one-off awards, often around £10,000, though some programmes offer larger amounts, sometimes up to £50,000. Because opportunities are limited and competition is high, grants can be valuable but should not be relied on as a consistent income source.

Loans

Traditional loan finance can also be challenging. Banks do not usually take social impact into account, and you may be offered standard business loan rates. For organisations viewed as higher risk, rates can be higher still.

Social Impact Investment

Social investment can take many forms, including loans, equity agreements, revenue share arrangements (often referred to as quasi-equity), blended finance, and other specialist structures. Social investors typically consider both financial sustainability and social impact, and may structure repayments in a way that supports an organisation to deliver impact while still achieving a return.

Earned Income

Earned income comes from selling products or services. This could include charging at low margins to the community you serve, selling merchandise to supporters, delivering services to those in need, or selling into contracts with the public sector, charities, or other social enterprises. This can become complex, particularly when organisations need to balance mission and affordability with the need to generate sufficient income.

The right funding option will depend on factors such as income stability, growth plans, approach to risk, and the nature of the organisation’s impact.

When grants may be part of the picture

Grants can be an important source of funding for social enterprises, particularly in the early stages or during periods of transition. They can offer flexibility, support experimentation, and help organisations develop new approaches while income streams are still taking shape.

That said, grants are typically time-limited and highly competitive, and do not always provide the stability needed for long-term growth. As organisations begin to deliver services that generate income, many look beyond grants to complement them with other forms of finance.

In some cases, grants can work alongside repayable finance as part of a blended approach, helping organisations build resilience and strengthen their financial position while continuing to develop sustainable income.

Loans and Equity as sustainable Social Investment

Loans, equity, and revenue share arrangements are forms of repayable finance designed for organisations with trading income. Unlike grants, this funding is repaid over time, which can support longer-term planning and financial resilience.

For social enterprises with more predictable income, repayable finance can enable activities such as expanding services, investing in property or equipment, or managing cash flow. Social investment differs from mainstream finance by considering social impact alongside financial return, reflecting the realities of purpose-led organisations.

Social investment funds can offer patient capital that supports sustainable growth while remaining aligned with an organisation’s mission and values.

How Big Issue Invest fits into the funding landscape

Big Issue Invest exists to provide finance to organisations tackling poverty and inequality across the UK. We focus on repayable finance that supports long-term sustainability rather than short-term fixes.

Our role is not to replace other forms of funding but to complement them. We work with social enterprises and charities that are trading, delivering impact and looking to strengthen their income through appropriate finance.

We offer a single entry point into different types of impact-led funding, helping organisations understand whether loans, equity, or blended approaches are suitable for their circumstances.

Choosing the right funding option for your organisation

Choosing the right type of funding is rarely a simple decision. It involves reflecting on your organisation’s income, capacity, risk and long-term goals. It also requires deep research, resources like Good Finance and the Reach Fund and some aspects of the Impact Investing Institute’s Learning Hub can be incredibly helpful in learning what’s out there and how to get it. 

There is no single “best” funding option that applies to every organisation. What matters is finding finance that supports your mission without creating unsustainable pressure. For some organisations, grants and crowd funding may remain the right fit. For others, loans or equity agreements may offer greater finance and flexibility over time.

Taking time to understand your options can help ensure funding strengthens your organisation rather than constraining it. If you’re considering taking on new funding we’re always happy to start a conversation or you can check out our readiness guide.

FAQs

Do social enterprises have to rely on grants?
No. While grants can be important, many social enterprises use a mix of funding types, including government service contracts, crowd funding, selling goods and services to the public and other businesses or charities, and repayable finance.

Are loans suitable for social enterprises?
They can be, particularly where an organisation has reliable income and a clear plan for repayment. Loans are often used to support growth or investment in long-term assets.

What is social investment?
Social investment refers to finance that seeks both a financial return and a positive social impact, supporting organisations whose primary purpose is social change.

How do organisations know which funding option is right?
The right option depends on an organisation’s stage, income, impact and ambitions. Open conversations and careful consideration can help clarify what is most appropriate.