Here are some common questions we hear:
The Social Enterprise Fund, established in 2008 through a collaboration between the Edmonton Community Foundation and the City of Edmonton, seeks to provide financial support to organizations across Alberta that are developing a social enterprise.
There are almost as many definitions of social enterprise and social entrepreneurs as there are individuals working in the sector. But one of the most straightforward definitions is from the 2010 Canadian Task Force on Social Finance:
“… 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 cooperatives to social purposes businesses, which are for-profit businesses designed to fulfill a social mission.”
SEF does not put restrictions on how our clients use the money. We consider all the costs of making the enterprise work and have financed everything from construction and equipment costs to manpower, training, marketing and sales campaign costs.
A great way to see how SEF loans can be used is to take a look at what our clients have done so far. You can find out more here.
Currently, most of our loans are term loans. However, we are always open to a conversation with our clients to find a solution that works best for them.
If SEF decides to make a loan, the client will receive an offer letter. The letter includes the basic terms of the loan, such as the interest rate we are offering, along with proposed securities. Sometimes an offer may be made with conditions because of various timing issues. These can include everything from permits to purchases that could not be completed until financing is confirmed.
If the client decides to accept the offer, they sign and return a copy to SEF. A financing agreement and security documents will then be prepared by SEF’s lawyers who will work with the client’s lawyers to arrange with the client for signature. When all the documentation is in place and any conditions are satisfied, funds will be released according to our agreed disbursement schedule.
It is important that SEF tracks the impact in the community of our loans, and we look forward to celebrating your successes. After an offer is accepted, we work with our clients to create a straightforward, mutually agreed upon annual measurement report on your activities. To do this, we will ask you to provide us with information you use to determine whether you are meeting your mission goals, including:
SEF also requires annual third-party prepared financial statements from our clients, usually at the Review Engagement level. We will consider a Notice to Reader level, but this should be requested during completion of the Financing Agreement.
Our interest rates reflect our evaluation of the risk of the investment, but generally range between one to three points above bank prime rates.
It’s not a requirement by SEF, but it is probably a good idea. You will be considering a substantive legal agreement, perhaps more complicated than any you have encountered before, and you may be committing your enterprise to live with for years to come. Our experience is things go much more smoothly for our clients if they have their own legal counsel.
If you decide not to use a lawyer, SEF can arrange for 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.
SEF does not charge application, administration or change fees, but clients are responsible for the initial legal costs SEF incurs to prepare and register the security documents. These fees will either be subtracted from the first disbursement of funds or invoiced at a later date.
We work with our clients and their resource needs on a case-by-case basis to determine what works best to ensure the success of their enterprise.
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.
SEF does not charge change fees or penalties if our clients want to repay some or all of their loan before the end of the term. Contact SEF’s executive director for details.
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.
No.
No. There are many excellent training opportunities available across the country. Find out more in our Resources section.
SEF loves when our clients recognize our contribution — it helps spread the word so others learn about a tool that could help them too. You can find our logo here.
