Social enterprises are increasingly using working capital to finance their operations and deliver contracts, according to a report by the social investment foundation Access and the social enterprise membership body Social Enterprise UK.
The report, Prospecting the Future: social enterprise and finance data from 2011-2015, says the proportion of new funding spent on working capital by social enterprises has increased from 28 per cent in 2011 to 43 per cent in 2015.
The report says "this could well be indicative of a more challenging operating environment: both a greater move to restricted contracting and subcontracting arrangements, and also of the tighter margins organisations are working with, and an associated diminution in reserves".
It says that although the median amount of finance or credit applied for by social enterprises has fallen over time, from £100,000 in 2011 to £51,500 in 2015, the median amount that social enterprises manage to raise has remained consistent at £60,000.
The report, based on figures from three sets of research, each carried out by SEUK with at least 800 social enterprises over the past six years, says that although social enterprises in the north of England request on average the largest amount of funding, those based in London are more likely to receive the money they ask for.
Peter Holbrook, chief executive of SEUK, said that access to finance "has always been an important issue for social enterprises and is one of the key barriers for those both starting-up and seeking to grow".
Seb Elsworth, chief executive of Access, said: "This report adds further weight to the case that social enterprises need access to smaller loans and blends of loan and grant which can help them to grow."