Access to Finance for UK Social Enterprises

We investigate access to finance for social enterprises, including those that are women and minority ethnic group (MEG) led. Using data from the UK Longitudinal Small Business Survey, we find that relative to small and medium enterprises (SMEs), social enterprises are less likely to apply for bank overdrafts, but more likely to apply for government grants. However, upon application, social enterprises are more likely to receive commercial mortgages, credit card funding, government grants and loans from mainstream financial intermediaries. By leadership diversity, women-led social enterprises are more likely to apply for loans from a bank, but less likely to receive bank funding compared to male-led counterparts. Our results also show that MEG-led social enterprises are less likely to apply for credit cards and government grants. Nevertheless, when they do apply, MEG-led enterprises have a higher probability of being granted government funding. In contrast, upon application, their chances of securing a bank overdraft facility are lower compared to those led by non-minority ethnic groups.