Repayable Finance Explained for Charities & CICs
Repayable finance explained for charities and CICs
Repayable finance is becoming a more familiar topic of conversation around funding for charities and Community Interest Companies (CICs). For some organisations, it offers a way to invest in long-term sustainability when grant funding alone no longer meets their needs. For others, it raises understandable questions about risk, responsibility and whether this kind of finance is appropriate at all.
Caution is reasonable as repayable finance is not suitable for every organisation and it is not a replacement for grants. It is just one option within a wider funding landscape and it is one that requires careful thought and confidence around income and repayment ability.
This page explains what repayable finance means in practice. We explore how it can work for charities and CICs and how organisations typically approach it when it becomes relevant. The aim is to support understanding not to push organisations towards a particular decision.
What do we mean by repayable finance?
How it differs from grants
Where social investment fits
Social investment is repayable finance designed for social purpose, balancing impact with repayment and typically structured to support long-term sustainability. It often becomes relevant when grant funding alone is not sufficient and traditional finance does not reflect how the organisation operates.
How charities and CICs use repayable finance in practice
Organisations commonly use repayable finance to secure or improve property, invest in systems and infrastructure, fund growth or manage transitions, or bridge timing gaps between income sources. It is usually taken on deliberately to strengthen foundations, with careful attention to affordability, risk and long-term resilience.
When repayable finance may and may not be appropriate
A helpful starting point is one question: why are we borrowing? If this is not clear to trustees or senior leadership, it is often a sign that it is not the right time.
Repayable finance may be appropriate where an organisation has stable trading income or contracted revenue, and borrowing supports a planned step forward, such as:
- Financing growth plans with a clear route to repayment
- Launching a new product or service where there is a realistic path to profitability
- Managing cash flow where contracts are paid in arrears
- Bringing forward impact-led expenditure where future income or fundraising is credible and well forecasted
Repayable finance is less likely to be appropriate where it is being used to fill gaps caused by uncertainty or income loss, such as:
- Replacing lost grant funding without a secure repayment route
- Refinancing directors’ loans or internal liabilities
- Hiring a fundraiser or salesperson as the main mechanism for generating repayment income
- Funding a very early-stage organisation without specialist risk-bearing support or a path to reliable earned income.
Property investment may also be a valid use of repayable finance, but it requires careful consideration. It is important to assess whether ownership is directly linked to mission delivery, whether it is more viable than renting, and whether repayments remain affordable if costs rise or income changes.
Deciding not to use repayable finance can be the right decision and suitability depends on context. Choosing funding that best supports an organisation’s mission is more important than simply following a particular route.You can read a deeper dive by Holger Westphely, our Managing Director, here where he explores these themes in detail. Reach Fund can also help you understand if you’re ready and help you prepare to take on Social Impact Investment. If any of these themes are unfamiliar to you, you can always read up on the resources at Good Finance, including this Diagnostic Tool to see if you’re ready for Social investment.
How Big Issue Invest approaches repayable finance
At Big Issue Invest, we work with organisations tackling poverty and inequality across the UK. Our approach to repayable finance is long-term and impact-led, shaped around how organisations actually operate.
We focus on fit and sustainability rather than speed of growth or volume. Repayable finance is considered in the context of an organisation’s mission, income and capacity and is structured to support long-term impact.Our role is not to promote one funding route over another but to support understanding and informed decision-making within a wider funding landscape. You can begin a funding conversation today here
FAQs
Can charities and CICs use repayable finance?
Yes. Most charities and CICs can use repayable finance but please check your organisation’s articles of association to confirm this.
Is Social Investment Repayable Finance the same as a bank loan?
No. While both involve repayment, repayable finance from Social Investment is aimed at mission-led organisations and so is often more flexible and designed around social purpose rather than being based purely on commercial criteria.
Is social investment suitable for every organisation?
No. Social investment works best where it aligns with an organisation’s income, mission and capacity. It is not a replacement for grants and will not suit all organisations.
What happens if income changes?
Changes in income are a reality for many organisations. This is why affordability, careful planning and financial flexibility are important considerations when exploring repayable finance.
As social impact investors we understand not everything can be foreseen, we will work with our investees to find solutions if investment repayments unexpectedly become unaffordable.
