Is a type of finance where the repayments of a loan are spread over a set period of time effectively reducing the amount borrowed until it is repaid.

Angel investors

High net worth individual who make investments, typically in early-stage enterprises. See product types for more information. 


In relation to an organisation's accounts. a financial benefit recorded on a balance sheet. Assets include tangible property (i.e. a property with a physical form such as buildings, equipment and vehicles) and intangible property, and any claims for money owed by others. Assets can include cash, inventories, and property rights.

Asset lock

A general term used to cover all the provisions designed to ensure that the assets of an organisation, including profits or surpluses generated, are used for the benefit of its community or to further its activities and mission.

Asset transfer

Where a charity or social enterprise takes ownership of a building previously owned by part of the public sector; the building is usually one that is particularly valued by the local community.

Balance sheet

A "snapshot" of the assets and liabilities of an organisation at a single point in time.

Base rate

This is sometimes called the ‘Bank of England base rate’ or ‘Bank Rate’. It sets the level of interest all other banks charge borrowers and its purpose is to help regulate inflation. Some social investors set their interest rates relative to this rate of interest e.g. base rate + 2%. It is important to understand how the cost of interest will be calculated on any money you are looking to borrow.

Blended finance

is mix of investment - part repayable finance and part grant. Specialist social investors and grant makers may offer this, but you can also source blended capital yourself by applying for both grants and loans. 


a promise by a borrower (the issuer) to repay money to an investor (the bondholder) usually with interest (the coupon). The issuer borrows money by selling bonds to bondholders; the issuer receives the money and the bondholder receives a promise from the issuer to repay the debt at a later date, with interest (usually through a written contract). 

Bounce back loan

Is a new scheme introduced to help smaller businesses impacted by COVID-19 access repayable finance. Social enterprises and charities can apply online to borrow £2,000 - £50,000. Because of the government guarantee, the loan is interest free for the first 12 months and then subsequently carries a 2.5% interest rate.


Capital usually refers to financial capital or money and in particular the amount of cash and other assets held by an organisation.

Capital repayment holiday

A period of time, usually at the start of a loan, where the lender agrees to receive only interest payments, so the borrower won’t pay back any of the original capital lent during this period. This is usually used to allow new trading activities time to generate revenue before the full cost of borrowing kicks in, or to help improve cash flow during tough periods of trading.

Capital Risk

is the risk where an investor might lose money from an investment and where as a result, the organisation is unable to either make the repayment of the loan or is unable to recognize the returns the investor expected to receive.

Capstone investor

the final investor in a fund or a project whose investment secures the other investments and enables the fund or project go ahead

Cash flow

the actual cash held by an organisation over a given period. A cash flow forecast shows the total expected outflows (payments) and inflows (receipts) over the year, usually on a monthly or quarterly basis. It is an essential tool for understanding where there will be shortages and surpluses of funds during the year and planning for ways to resolve these.

Catalytic capital

Is investment capital that is patient, risk-tolerant, concessionary, and flexible and is an approach used to support impact-driven enterprises that lack access to capital on suitable terms and to unlock impact and additional investment that would not otherwise be possible.


investment in a project or fund alongside and often on the same terms as other investors.

Community development finance institution (CDFI)

a private financial institution that provides affordable loans and support to businesses, social enterprises and individuals who struggle to get finance from high street banks and loan companies.

Community Shares

refers to withdrawable share capital; a form of share capital unique to co-operative, community and charitable benefit societies. Investors are able  to take their money out (subject to any conditions) but the shares are not transferable to another person.

Convertible Loan

is a short term debt, that will either be repaid or converted into equity at a later date.

Cornerstone Investment

 the principal investor in a fund or project whose commitment to invest may give confidence to others to invest.

Cost of Capital

The rate of return that is required to return an investment factoring in risk, costs associated with structuring a deal and the time money is to be lent over.



the terms of a grant that describe the circumstances in which you’d need to repay the money.


is a way of raising finance (donations/grant, equity or debt) from a 'crowd' of people - typically using an online platform. Equity or debt raised using crowdfunding is repayable on an agreed basis with the individual investors, usually with interest on top.

Debt Finance

investment with the expectation of repayment (usually with interest). Debt finance usually takes the form of loans, both secured and unsecured, as well as overdrafts and standby facilities or standby facilities (e.g. bonds or loan notes). Generally, debt financing requires a borrower to repay the amount borrowed along with some form of interest, and sometimes an arrangement or other fee.

Development capital

money (typically invested as equity) to enable organisations to build capacity, for example by purchasing property or other assets, or developing new products and services.


The unjust or prejudicial treatment of different categories of people, especially on the grounds of race, age, sex, or disability.


a sum of money paid regularly (typically annually) by a company to its shareholders out of its profits (or reserves).

Due Diligence

is the process an investor undertakes when considering an organisation for investment.  This process varies from investor to investor, but will generally include an in depth review of your organisation, including governance, financial information, business model, revenue, projections, organisational management etc. This process gives the investor an opportunity to become better  informed on where their money is being invested, and determine if the investment is the right fit for them.   


Environmental, Social & Governance

Non-financial performance indicators focusing on ethical, sustainable and corporate governance, ensuring systems are in place to give accountability on important working practices and global issues. For example in areas such as: net zero aspirations, managing the organisation’s carbon footprint, gender and ethnicity pay, living wage and social mobility. 


Equal Access

Equality means each individual group of people is given the same resources and opportunities.

Equitable Access

The equitable solution allocates resources that each person or group needs, leading to positive outcomes for all groups (not be confused with equity, which is a type of investment in exchange for a stake in an organisation). 

Equity investment

investment in exchange for a stake in an organisation, usually in the form of shares. Each share represents ownership of a proportion of the value of the company and typically provides the shareholder with voting and dividend rights. Equity finance is permanently invested in the organisation which has no legal obligation to repay the amount invested or to pay interest. Equity investors expect to receive dividends paid out of the organisation’s earnings available for distribution and/or capital gain on the sale of the organisation or on selling their shares to other investors. See product types for more information. 

Equity like

is essentially a type of debt structured to act like equity where the organisation's governance is not structured to be able to issue shares.


an arrangement whereby a lender provides monies to a borrower. "Facility" is often used interchangeably with the term "loan". 


This may also be known as an arrangement fee. It is the cost charged by an investor to structure a deal and will cover staff time, overheads etc covering their professional services to the investee.

Financial Abuse

Financial abuse often involves or is associated with: someone taking or misusing someone else’s money or belongings for their own gain; harming, deriving or disadvantaging the victim; controlling someone's purchases or access to money; often associated with other forms of abuse; doesn’t always involve a crime life theft or fraud.

Financial returns

the monetary surplus generated by an organisation on an investment. It may be expressed as "not" (i.e. after deducting all expenses from the gross income generated by the investment) or "gross". 

First loss

it is possible to have different tiers of investors so that one set of investors accepts that, in the event that the investee suffers financial difficulties, it will lose the money it invested before any of the other investors lose any money. This investor will bear the ‘first loss’.

Flexible Finance

Investment that is structured with a repayment schedule that’s tailored to your organisation’s specific needs. The conditions of the investment will work alongside your business plan to allow income to develop alongside the need for repayment. This could include a range of options including but not limited to:

  • An initial capital and interest repayment holiday period (in order to get trading off the ground)
  • An interest only period (this keeps repayments low)
  • A sliding scale of interest (this might be related to profitability or return)
  • Investment could be made in the form of a loan or equity (although this will depend on your organisation's legal structure) 


a collective investment scheme that provides a way of investing money alongside other investors with similar objectives on a pooled basis. This often provides individual investors with access to a wider range of investments than they would be able to access alone and may reduce the costs of investing due to economies of scale. Funds are managed by fund managers for a management fee on behalf of investors.


a conditional or unconditional gift of money with no expectation of repayment. See product types. 


is an agreement between an investor and the guarantor of an organisation wanting to take on social investment if the debt cannot be repaid by the investee, the guarantor will step in to cover the costs.


High net worth individual

a person who:

a) has an annual income of £100,000 or more;

b) net assets of £250,000 or more. 

Human Rights

Human rights are universal and inalienable rights and freedoms that belong to everyone. Based on the principles of fairness, equality and respect, they reflect the conditions that all people need to both flourish as human beings and participate as members of society.

Individual Discrimination

Concerns individual prejudicial or unfair behaviour to others based on their status or characteristics.


This refers to unfair differences in the extent to which different people and groups are able to realise their human rights and freedoms.

Institutional Discrimination

Concerned with discrimination that has been incorporated into the structures, processes and procedures of particular organisations or institutions, either because of prejudice or because of a failure to take into account the particular needs of different social identities.

Institutional investors

organisations making investments e.g. pension funds or insurance companies.


fee paid by a borrower to a lender to pay for the use of borrowed money. When money is borrowed, interest is typically paid to the lender as a percentage of the amount owed. Interest usually accrues on a daily basis but is charged less frequently, e.g. monthly, quarterly or annually.

Investment readiness

an organisation having the systems, processes and business model to be able to attract investment


in relation to an organisation's accounts, a financial obligation or debt to another party entered on a balance sheet.


refers to the availability of cash that an organisation has to meet short-term operating needs. It is the amount of liquid assets that are available to pay expenses and debts as they become due.


a sum of money which is borrowed and has to be paid back, usually with interest. See product types for more information. 

Loan capital

is capital that is raised through borrowing on fixed terms to help organisations deliver and grow.


Marginalised populations are groups and communities that experience discrimination and exclusion (social, political and economic) because of unequal power relationships across economic, political, social and cultural dimensions.


public place where buyers and sellers make transactions, directly or via intermediaries.


combining two companies to create one larger company that is expected to be more valuable than the individual companies on their own.

Mezzanine Finance

is a type of debt that includes investment, it can be used for a range of reasons. The cost of this finance can carry higher interest rates and can also involve equity characteristics.

Net Present Value (NPV)

present value of expected future cash in flows minus the present value of cash outflows e.g. the amount of investment and any initial and ongoing investment costs. Often used in capital budgeting to determine whether or not to make an investment (if negative, the investment should not be made).

Nominal rate of return

rate of return expressed only in monetary terms - so not adjusted for inflation.

Operational risk

risk arising from failed processes in carrying out business functions.

Ordinary share

share in the ownership of a company that gives the holder the right to receive distributed profits and to vote at general meetings of the company. An ordinary shareholder ranks behind all other creditors/investors if the company is wound up.


an amount agreed between a borrower and a lender (typically the bank of the borrower) up to which an organisation can borrow when it needs funds rather than in one lump sum. Overdrafts are repayable on demand by the lender. Interest is usually paid on the amount of money that is borrowed until it is repaid and rates are usually higher than for standard loans. See product types for more information.

Patient capital

loans or equity investments offered on a long-term basis (typically 5 years or longer). It is often used to describe long-term investment by investors looking for non-financial as well as financial gains and may be offered on soft terms (e.g. capital/interest repayment holidays and at zero or sub-market interest rates).

Peer-to-peer lenders

investors investing directly into borrowers (rather than in a financial institution) typically using online platforms that match (usually individual) lenders with borrowers to create crowdfunded loans for both business and individuals. See product types for more information.

Philanthropic capital

Capital offered for investment which focuses more on the impact that an organisation is delivering on instead of the potential return of investment. As a result this type of capital is usually able to tolerate making higher risk investments. 



a sum of money lent or invested, on which interest is paid or earned (or the balance of a loan, net of interest and amounts repaid).


Social investment products range from well-known mechanisms, such as overdrafts and mortgages, to more unfamiliar forms such as quasi-equity and patient capital. There are two main types of social investment - Borrowing (debt) or Shares (equity). Click here for more information on the full range of products.

Profit and loss account

also known as an income and expenditure account, it shows income earned for the year and deducts from it all expenses incurred in earning that income. This will show a profit (surplus) or loss (deficit) for the year, depending on whether income is larger than expenses or expenses have exceeded income.

Quality Jobs

Opportunities for work that is productive and delivers a fair income, security in the workplace and social protection for families, better prospects for personal development and social integration, freedom for people to express their concerns, organise and participate in the decisions that affect their lives and equality of opportunity and treatment for all women and men’


is an investment product that aims to fill the gap between debt & equity - a patient repayment process based on trading performance.

Reducing Inequality

is defined as lessening unfair differences in the status, treatment and outcomes of different people and groups in one or more aspects of their lives (e.g. economic, social, cultural, political and/or environmental).

Repayable finance

money that has been provided to you to use which you’ll need to return on certain terms at some time in the future.

Responsible Business Principles

Are a framework of the core values and behaviours that make up an organisation and include everything from how employees are treated to how investment decisions are made including the impacts of any decisions on ESG: Environment, Social & Governance.

Restricted funds

funds (often grants) that can only be used for a specific purpose or project and cannot be used for other purposes. These can also be referred to as ring-fenced or earmarked funds.

Retail investor

Otherwise known as an individual or ordinary non-professional investor who buys and sells investments.


Revenue participation note

is an agreement by an investor to provide capital to an enterprise up front, in return for an agreed portion of future revenue and/or profit.


This factors in the likelihood of the investment being paid back. For example borrowing money to buy an asset such as a building which is considered to be lower risk than lending money to a start up organisation with no proven track record.

Risk Appetite

is the level of risk an organisation is prepared to face in order to meet their objectives. It is a framework to ensure organisations are making informed decisions including the appetite to take on investment and associated risks.

Secured (debt) loan

a loan that is backed by property (in the case of a mortgage) or assets belonging to the borrower. This may be the property or asset that is being bought with the loan itself or other assets held by the organisation. If an organisation defaults on its debt, the lender can sell the asset to recoup, in full or in part, its loan. See product types for more information.

Senior debt (loan)

debt that takes priority over other unsecured or otherwise more junior (or subordinated) debt. In the event that the borrower organisation is wound up, senior debt theoretically must be repaid before other creditors receive any payment.

Social enterprise

a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners. #SocEnt

Social impact

there is no one definition of the term or concept, but the social impact can be defined as the effect on people that happens as a result of an action or inaction, activity, project, programme or policy. The 'impact' can be positive or negative and can be intended or unintended, or a combination of all of these.

Social Impact Bond (SIB)

a payment-by-results contract where social investors pay for an organisation to deliver a service - for example, helping homeless people to find a home - and the commissioner (typically government or local authority) repays the investors with interest if the service is successful unlike a conventional bond, they do not offer a fixed rate of return. See product types for more information. 

Social investment finance intermediary (SIFI)

an organisation that provides, facilitates or structures financial investments for social sector organisations and/or provides investment-focused business support to social sector organisations.

Social Investment Tax Relief (SITR)

offsets the risk to investors by offering a 30% tax relief on qualifying investments. It can be used by eligible social enterprises, charities and community businesses to raise patient, flexible and more affordable capital to support their trading activities.

Social investment wholesaler

an investor which makes larger investments in funds or financial organisations (social investment finance intermediaries) that will themselves invest smaller amounts in a number of charities and social enterprises. Big Society Capital is the UK social investment wholesaler.

Social sector organisations (Third Sector)

charities and social enterprises that exist primarily to deliver social impact; that reinvests the majority of surpluses to further their social mission; and that are independent of government. The social sector includes, but is not limited to voluntary and community organisations, charities, social enterprises, community interest companies and community benefit societies. The social sector is also referred to as the "Third Sector".

Standby or revolving credit facility

usually provided in the form of a loan where money can be drawn down over a certain period of time when an organisation needs it (if budgeted income does not materialise), rather than as one lump sum. Interest is charged only on the funds drawn down. This is similar to an overdraft but is typically repayable on a fixed date (rather than on-demand). 

Structural or Systemic Discrimination

Refers to macro-level or overarching rules, norms, routines, patterns of attitudes and behaviour in institutions and other societal structures that represent obstacles to groups or individuals in achieving the same rights and opportunities that are available to the majority of the population.

Subordinated or junior debt/loan

debt which is ranked after other more senior debt. In the event that the borrower organisation is wound up, subordinated debt will be paid only after other senior creditors have received payment. This is a riskier investment for a lender and is therefore typically lent at a higher interest rate than senior debt.


Taxonomy is essentially another word for categorization that also has key principles which then explain each subset of the categories. In the social investment world, it can be used to categorise the reasons why organisations want to take on investment as it's extremely beneficial to fund managers and other stakeholders to be able to see trends, themes and potential opportunities. Keeping it clear and comprehensive is key to creating a successful taxonomy, so that users and readers can clearly understand how to use it and why it is useful.



This relates to the length of time that an investment is made over and when and how it is due to be repaid.

Term loan

a loan drawn as a lump sum or in several portions, for a set period of time with an agreed schedule of repayment. Once any part of the loan is repaid, it cannot be re-borrowed. 

Triple bottom line

approach to measuring a company’s performance on environmental, social and economic issues. The triple bottom line focuses companies not just on the economic value they add but also on the environmental and social value they add or destroy.


a commitment, for a fee, by a lender or investor to provide financing if other sources fail.

Unrestricted funds

funds that can be used however and wherever an organisation needs to further its objectives.

Unsecured loan

a loan that does not take security over an organisation’s assets. Because the risk for the lender is greater, interest rates are usually higher than for secured loans.


process of determining the value of an asset or a portfolio of assets, including any accrued income.

Venture capitalist

a professional investor who provides capital to early stage businesses.

Voluntary Carers

A person, usually a relative, parent, spouse, partner, child, or friend, who provides regular and substantial voluntary care, often in lieu of a paid care worker, to someone who is disabled, severely ill, frail or has a mental health problem.


People or groups of people that experience higher risk of harm, abuse, disadvantage, and discrimination

Working capital

finance used to manage the timing differences between spending money and receiving it (income and expenditure).


when all or part of the value of an asset (e.g. an investment) as shown in an organisation's accounts is reduced. In respect of an investment, this may occur when the investor considers there is no likelihood of any recovery of the amount invested.