1. What is social enterprise?
There are almost as many definitions of social enterprise and social entrepreneurs these days as there are people involved – and the sector is becoming more popular all the time. One of the most straightforward definitions is that of the Canadian Task Force on Social Finance in their 2010 report Mobilizing Private Capital for Public Good.
Social enterprise is defined as any organization or business that uses market-oriented production and sale of goods and/or services to pursue a public benefit mission. This covers many organizational forms – ranging from enterprising charities, non-profits and co-operatives to social purpose businesses, which are for-profit businesses designed to fulfill a social mission.
2. Why would SEF lend us money when banks won’t take the risk?
The goal of SEF is to strengthen entrepreneurship in Edmonton’s social enterprise sector, primarily through financial investments. At the moment, we work mainly with non-profit organizations, and recognize that many NFP organizations have difficulty securing financing from the traditional lending industry.
Our mandate allows SEF to accept a greater degree of risk than a traditional lending agency, and to be more patient in our repayment terms. But that doesn’t mean that SEF does not employ the same level of rigour in accessing the potential of proposals for financing. We are as determined as any lending institution to have each and every loan repaid within the agreed-upon terms. The long term viability of SEF depends on our loans being repaid – with interest.
3. Isn’t SEF just duplicating services already out there?
No. SEF is unique in its ability to tailor its support to the specific needs of each client. We can work with you to come up with a loan structure that works for your proposal. We like to think of SEF as very imaginative and patient capital.
4. What can we use a SEF loan for? Are there restrictions on how we can use the money?
No. We consider all the costs of making your enterprise work, and have financed everything from construction and equipment costs to manpower, training and marketing/sales campaign costs.
5. How much interest do you charge?
Our interest rates reflect our evaluation of the risk of the investment, but generally range between one to two and a half points above bank prime rates.
6. What kind of loan can I get?
Currently, most of our loans are term loans. However, we are interested in working with our clients to come up with a solution that works best for you.
7. What repayment schedules does SEF require?
We work with our clients and their resource needs to determine what works best to ensure the success of their enterprise.
8. When can we apply?
When you are ready. SEF has no application deadlines, so bring your proposal to us when you would like to start discussions.
9. To what does SEF give more weight – the value of the mission or the viability of the business plan?
A social enterprise blends the value of social benefit with a sustainable business enterprise. The two components are equally important in a successful social enterprise, and to SEF.
10. What’s your decision making process, and how long does it take before I can access the money?
A lot depends on you. SEF staff will thoroughly review the proposal and the organization and the management team behind it. If we are satisfied all the information is complete and the answers are sound, a proposal will go to the SEF board for review, and if approved, a letter of offer will be made. SEF has been able to make an offer in as little as a month, but if we are not confident we have the information and understanding we need from you, it will take longer.
11. Where does your money come from?
SEF’s loan funds come from several contributors including the Edmonton Community Foundation, the City of Edmonton, the United Way, the Alberta Real Estate Foundation and a number of private donors.
12. What makes a successful social enterprise?
Many elements contribute to a successful social enterprise, but SEF’s experience has pointed to a few key elements.
It is critically important that the enterprise have a clear understanding of its marketplace, along with realistic expectations of potential revenues and customer behaviour. What will trigger your customer to buy your service or product? Do they have the money to do so? Do you know how to reach that customer, and have the capacity to do it?
It is also very important that the organization be in agreement about the expectations of the enterprise – and whether the priority is to earn revenue, promote the mission, or a blend of the two. No one answer is right for everyone, but successful social enterprises are usually those where the entire management team shares the same vision, and has the skills and drive to make it happen.
13. Do we need a lawyer?
It’s not a requirement by SEF, but it is probably a good idea. You will be considering substantive legal documents, perhaps more complicated than any you have encountered before, and that you may be committing your organization to live with for years to come.
If you decide not to use a lawyer, SEF can arrange for our clients’ final document signing to be handled by our lawyer, who will ensure that all necessary copies and affidavits are correctly prepared. Please contact our executive director for details