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Bank lending

Bank lending can be an affordable route to finance for many social enterprises and charities.

  • £30.1m Drawn down from Big Society Capital – Data from Big Society Capital
  • £223.6m Drawn down from Big Society Capital and other investors alongside us
  • 5.1x Amount our capital has been matched by other investors

The challenge

For many social enterprises and charities, a loan secured on a building or other asset is an affordable route to finance. Yet even many with assets find it hard to access finance via mainstream banks, while others are looking for a more aligned and supportive relationship from their bank. At the same time, depositors increasingly want to invest in line with their values, and to know where their money is going.

Our approach

We believe dedicated social banks are best placed to understand charity and social enterprise business models and deliver impact by lending on attractive terms with low loss rates. They also have regional distribution, enabling them to reach a wide range of organisations.

Our approach to strengthening social banks starts with supporting them to raise regulatory capital to enable them to grow their loan book. We have invested £20.6 million to date in Charity Bank and Unity Trust Bank (UTB), helping them achieve the scale to be sustainable. In turn, we expect the loans made to social enterprises and charities help them build resilience and growth – to scale or sustain their impact - underpinned by social banks' deeper understanding of the sector.

  • 2445 Number of loans to social enterprises and charities – Data from social banks and Big Society Capital's market sizing analysis
  • 160% Growth of social banks since 2012
  • £1.7bn Amount of capital social banks provide to the social impact investment market

Impact and learning

We understand our impact through social banks at a number of levels:

A stronger social banking sector

Social banks provide £1.7 billion of capital to the social impact investment market, a growth of 160% since 2012. UTB’s loan book has grown to £480 million while Charity Bank’s has increased to £179 million, supported by Big Society Capital’s equity investments, and leveraging in depositor money eight-fold. Social banks have secured investment from others, such as CAF Nominees and the Sustainable Finance Real Economies Fund, positioning them to grow in the future.

However, social banks remain small, in an increasingly heavily regulated market, and will need to continue to attract new regulatory capital to enable them to keep growing, so they will need to access a wider investor base.

Serving more charities and social enterprises

Since 2011, social banks have made 2,445 loans to social enterprises and charities.

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These investments have spanned social issues such as housing and local facilities and arts, heritage, sports and faith and range in size from £50,000 to £16 million. Big Society Capital's investments in social banks make up a third of this market with over 700 investments.

Contributing to stronger charities and social enterprises

Increasingly social bank loans are contributing to social enterprise growth and sustainability. For example, 81% of projects funded by Charity Bank wouldn’t have gone ahead without its support. 69% of their investees said their services grew as a result of the loan, while 78% improved the quality of their services. Meanwhile 42% of organisations said they would have gone under without the loan.