What is the difference between a social enterprise and a non-profit organisation?

Social enterprises derive a substantial portion of their income from trade and reinvest the majority of their profit/surplus in the fulfilment of their mission*. Non-profit organisations rely heavily on other sources of income such as government grants, philanthropic money and fundraising events and in comparison do not rely on trade for income. A non-profit organisation may have a branch that does operate as a social enterprise.

How does social enterprise differ from social entrepreneurs and social innovation?

Social enterprises - are organisations and collective agencies. They are led by an economic, social, cultural or environmental mission consistent with a public or community benefit; trade to fulfil their mission; derive a substantial portion of their income from trade; and reinvest the majority of their profit/surplus in the fulfilment of their mission.*

Social entrepreneurs - are the ‘individuals who pursue opportunities to create pattern-breaking change in inequitable systems, whether through social enterprises or other means’.**

Social innovation - is focused on the processes of social transformation.

Is the Social Enterprise Solutions program giving out grants or loans?

Social Enterprise Solutions provides loans to social enterprises for asset building and business development or purchase of equipment.

What are the requirements to be eligible for a loan?

To be eligible for a loan, the organisation must be a social enterprise trading to fulfil its mission to provide public or community benefit; require the loan for asset-building, business development or purchase of equipment; and demonstrate capacity to repay the loan.

What is the process to secure a loan?

Social Enterprise Solutions works with social enterprises through a multi-phased process, starting with an investment appraisal. A demand led, client focussed approach is taken when assisting social enterprises through the process and Social Enterprise Solutions will work with a social enterprise to complete the appraisal quickly if required.

A comprehensive overview of the process can be found under The Process.

Is the loan for start-up, emerging or established social enterprises?

Through the investment appraisal phase, Social Enterprise Solutions will analyse the enterprises' capacity and capability to repay the loan and identify any associated risks.

If capacity issues are identified in the investment appraisal, what happens?

During the investment appraisal phase, Social Enterprise Solutions will evaluate the social enterprise's capacity and capability to repay the loan. If an organisation is identified as not being investment ready after the investment appraisal has been completed, the enterprise will be referred to The Arboretum. Social enterprises are not required to use consultants from The Arboretum, and are welcome to choose their own independent consultants.

Can my enterprise re-join the loan process after making changes to my organisation?

Once a social enterprise has made the necessary changes as recommended in the investment appraisal phase, the enterprise can return to Social Enterprise Solutions to discuss the changes and re-join the loan process.

What is the interest rate charged for the loan?

The interest rate for each loan will vary as each loan is bespoke to the social enterprise requesting a loan. The interest rate determined is based on competitive market rates and will be dependent upon a number of factors including structure and associated risks of the investment and organisation.

Interest rates are not the only variable to consider when tailoring a loan. Term, loan to valuation ratio, security, repayment type i.e. principal and interest and repayment frequency all influence the suitability of a loan for a social enterprise.

Being able to tailor a loan to suit your social enterprise is another advantage of a loan through Social Enterprise Solutions.

What is the reason for the one off fee that is charged for investment appraisal and packaging?

The one off, affordable fee for the Social Enterprise Solutions service is to enable the Social Enterprise Solutions team to fully evaluate the strategy, operations, financial management, compliance and governance and loan requirements of your enterprise, determining its capacity to repay a loan and then packaging a loan to suit your organisation.

There are no other fees such as monthly account keeping, loan application fees, ongoing fees, establishment fees, discharge fees etc. Additionally, Social Enterprise Solutions are able to offer different terms and conditions than a main stream bank for example, we do not require directors guarantees.

What is the difference between the loan program that Social Enterprise Solutions provides and a loan from a mainstream bank?

Social Enterprise Solutions is a program of Foresters Community Finance (Foresters). The mission of Foresters is focused on financial inclusion in markets that are underserved by mainstream financial institutions - such as social enterprises.

For many social enterprises, approaching a mainstream bank for a loan is not a straightforward process. This is because:

• The social enterprise may seem different to a commercial business
• The social enterprise may require a unique finance product not provided by mainstream financial institutions
• The social enterprise may require support to build capacity and capability

Social Enterprise Solutions is differentiated from mainstream lenders because the services provided leading up to a loan are designed to:

• Understand the enterprise in depth
• Support the appropriate packaging of the finance proposal (leading to a loan) and
• Build the capacity and capability of the social enterprise where necessary

This also makes Social Enterprise Solutions a useful partner to mainstream lenders interested in providing finance to social enterprises.

The Social Enterprise Solutions program provides ongoing support for social enterprises over the life of the loan. The process adopted means enterprises are not only provided access to finance, but the process of borrowing money becomes a learning and development opportunity for the social enterprise.

Does Social Enterprise Solutions give loans to start-up social enterprises?

Social Enterprise Solutions is offering finance to social enterprises in the form of a loan. In order for a social enterprise to borrow money, it must be able to demonstrate the capacity to borrow and repay a loan. Some start-up social enterprises achieve borrowing capacity and security for a first mortgage through a link to a non-profit organisation or a parent organisation that provides security or a guarantee for the loan. This enables the social enterprise to establish themselves and lessens the financial risk for the lending body.

For enquiries regarding start-up social enterprises, contact the Social Enterprise Solutions team.  

What grant money or seed capital opportunities exist for start-up social enterprises?

Finding seed capital for a start-up social enterprise is often not an easy process and the supply of this form of capital in Australia is still as yet underdeveloped. Listed below are several avenues that social enterprises can pursue:

1.  Social Traders: http://www.socialtraders.com.au/

2.  Social Ventures Australia: http://www.socialventures.com.au/

3.  Business Grants Australia: http://australianbusinessgrants.com.au/?gclid=CKrTzYO71q0CFaFMpgodfA9y4Q

4.  RMIT SEED: http://rmit.net.au/browse;ID=givy2hstrrw8z

5.  Parramatta City Council Seed Funding: http://www.parracity.nsw.gov.au/work/economic_development/social_enterprise/seed_funding

6.  Westpac Foundations: http://www.westpac.com.au/about-westpac/sustainability-and-community/westpac-foundation/programs-funded/

7.  NSW office of Fair Trading: http://www.fairtrading.nsw.gov.au/About_us/Grants/Cooperative_development_grants_program.html

8.  UQ Business School Enterprize

9.  TACSI: http://www.tacsi.org.au/

Each state also has a Gambling Fund that fund for business projects

1.  QLD: http://www.olgr.qld.gov.au/grants/gcbf/index.shtml

2.  NSW: http://www.olgr.nsw.gov.au/olgr_default.asp

Note, this is not an exhaustive list but a starting point, Social Enterprise Solutions will continue to build this list over time. You can also check with your local and state governments for additional information on grants.

How does Social Enterprise Solutions support social enterprises through the ongoing review process?

Social Enterprise Solutions provides ongoing support to social enterprises post loan settlement. A team of consultants via phone conversations, consistent email correspondence and face-to-face meetings will continue to support the social enterprise during the term of the loan.

How can I stay in contact with Foresters Community Finance Ltd (Foresters) and Social Enterprise Solutions to receive more information?

For those interested in staying up to date with Foresters’ progress, news and events; keep a close eye on the Foresters’ website or join the newsletter mailing list by contacting Foresters. Additionally, you can become a Foresters member.

* Finding Australia’s Social Enterprise Sector. Social Traders and the Australian Centre for Philanthropy and Nonprofit Studies. June 2010.

** Finding Australia’s Social Enterprise Sector, Social Traders FAQ : ‘Where do “social entrepreneurs” fit in?’