What are blended finance products?
Blended products are finance packages that enterprises can access directly. They combine repayable finance alongside a second element that does not need to be repaid, for instance a direct grant and/or free advice and business support (also known as technical assistance). At Big Society Capital, we provide capital for these products to partners such as Access and fund managers or social investors such as Big Issue Invest and Key Fund. It is through our partners that these products are designed and provided to impactful frontline organisations. We also help them connect with other investors and stakeholders that will increase their chances of success, and scale the amount of capital available through these products.
How do they meet the needs of investors and frontline organisations?
Many social enterprise models are operating in challenging markets and therefore require enterprise-centric repayable finance including the mixing of investment and grants to enable delivery of their mission. Accessing traditional investment can be challenging - either because an organisation needs more flexible funding to take on investment and repay it (because of tight profit margins that prioritise social as well as financial value) or because investors are not familiar with their business models and therefore assess them as a higher risk. Concessional capital may be needed either to make the deal viable for the investor to proceed , or in order to make the deal affordable for the enterprise itself.
Example of a blended finance product
Big Society Capital committed £22m into the Growth Fund (a blended structure that offers blended products) – a partnership with The National Lottery Community Fund that since 2016 has offered over £36.5m in flexible, unsecured loans and £6.8m in grants to over 500 social enterprises and charities.
Read fund page
