SIF Q & A

To help you decide whether you are ready to submit an application, and to answer some commonly asked questions about the application process, we have prepared this Question and Answer section. If you still have questions that remain unanswered after reading this section then please do not hesitate to contact us.

Q What are the most important things you look for when assessing an application?
A The most important thing to consider is whether or not an investment from the Scottish Investment Fund will create a transformational step change in your organisation, in terms of operational capacity, capability and financial sustainability. We also look for applications that will contribute to the achievement of the Scottish Government’s 15 National Outcomes which are detailed here.

Q You say that we have to be “investment ready.” What does that really mean?
A Being investment ready can be measured in a number of ways, however some key features of readiness would normally include: a track record of generating income, other than grants, for at least three years; an established track record of service delivery; a robust business plan with three year’s financial projections; and the ability to generate strong historic and projected social outcomes. We assess investment readiness based on the information you provide to us, as well as an “Organisational Self Assessment Matrix” which asks questions in four areas, namely: your business model; organisational development; finances; and social outcomes.

Q I don’t think we are investment ready at this stage, we have some other investigations and research to do first. However, we may want to apply to the SIF in the future. Is there anything you can do to help?
A Yes. We can introduce you to a range of organisations who may be able to assist you with this process. You may also want to consider applying for to the Third Sector Enterprise Fund for assistance with support costs. For more information on this support, please see here.

Q Do I have to be based in Scotland?
A Yes. The Scottish Investment Fund will only invest in organisations that are located and trading in Scotland.

Q What types or organisations will you not invest in?
A SIF will not invest in:-
• organisations with little or no track record of generating income other than grants;
• organisations that are insolvent or at risk of insolvency;
• proposals that seek merely to replace existing debt finance;
• subsidiaries of public bodies such as local authorities;
• the core functions of support organisations, support bodies and intermediaries - Third sector trading companies which are owned or controlled by these organisations may be eligible;
• housing construction and management operations of registered social landlords (RSL);
• proposals that relate to the on-going delivery costs of services or projects;
• proposals capable of being fully funded on a commercial basis; or
• organisations whose beneficiaries live outwith Scotland.
If you are still unsure about your eligibility, please contact us and ask.

Q What can I use a SIF investment for?
A An investment can be used for almost anything, including marketing, operations, business development, purchasing a building or equipment. However, when applying you must be specific about what you will use the funding for.

Q What is the highest amount that I can apply for?
A The maximum total investment from SIF will be £1,000,000. The minimum is £100,000. At least half of this will be loan funding.

Q Do I have to take a loan?
A Yes. All SIF investments will include an element of repayable funding, although we are happy to work closely with you to help you with this process, particularly if it is the first time you have borrowed money. In general, the majority of the total investment amount will be made up of either term loan or risk capital. We will work closely with you to ensure that the overall loan repayment is not onerous. The balance of the investment will usually be in the form of a non-repayable Strategic Investment.

Q So should I speak to my bank as well?
A Yes. SIF’s aim is to provide funding where the banks will not or to provide additional funding beyond standard bank thresholds.

Q How can I work out what I can afford to repay? 
A The Social Investment Scotland website has a handy loan repayment calculator here. This will allow you to work out how much your loan repayments will be - you should assume a loan interest rate of 8% and a maximum term of 10 years. If your business plan and projections show that you cannot afford to repay loan finance at the required level then it is unlikely that your application will bee successful, however we can look at structuring alternative finance packages which may be more affordable.

Q What is Risk Capital?
A Risk, or patient capital is a new concept for the Not for Profit sector. In simple terms, although the capital sum borrowed will have to be repaid after a defined period of time, the interest that has accrued overt that period of time may be eliminated, providing pre-set and challenging social outcomes have been met.

Q What about State Aid?
A All potential SIF investments will be reviewed to ensure compliance with prevailing regulations on State Aid. Further guidance on State Aid rules will be provided to organisations whose proposals progress to the next stages of the SIF appraisal process. Applicants will be required to confirm the amount of public sector funding (including by BIG Lottery) received in the last 3 years either by way of grant or subsidised loan. Documentary evidence will also be sought in respect of such funding in order that we can be assured under what criteria within the State Aid rules the respective funding was granted. Further details on State Aid can be found by clicking here.

Q I’m ready to begin the application process. What do I do now?
A The first stage in applying for a SIF investment is to complete the simple online application form here. This form will ask some basic information about your organisation, the investment amount and purpose, as well as your contact details.

Q What then?
A A Fund Manager will then contact you to discuss your application in more detail and determine if it meets the criteria to proceed to the next stage, where there will be a more in depth review of your business plan, annual accounts and management accounts. The Fund Manager will always meet with you to discuss the proposed investment in more detail. We have prepared a useful checklist which covers each stage of the process.

Q I’ve heard you also carry out Learning Needs Assessments. What are they?
A The Social Enterprise Academy work with SIF applicants and awardees to identify and resolve specific learning needs which if resolved will help achieve your organisation’s overall goals. For more information on these assessments and how this process works, please click here.  

Q I’ve heard you use SROI. How does this work?
A Social Return on Investment, or SROI, is a key part of the SIF application process. We work with specialists in this area who would contact you to carry out a detailed review of your stakeholders and the social and financial impacts that a SIF investment would have upon them. For more information on SROI click here.

Q How are investments approved?
A An Investment Appraisal is prepared and submitted to representatives of an independent, impartial panel who will meet as required to review applications. More information on this panel can be found here.

Q If my investment is approved, what then?
A Social Investment Scotland colleagues will work closely with you to put in place everything that is required before the funds will be made available. After that, the team at Social Investment Scotland will continue to work closely with you over the course of the investment.

Q What’s the difference between SIF and SIS?
A SIS -Social Investment Scotland- is an organisation in its own right and is managing and delivering the Scottish Investment Fund objectives under contract from the Scottish Government. SIS offers purely loan funding to not for profit organisations. For more information please visit the SIS website.

Q I’ve heard you also carry out Learning Needs Assessments. What are they?
A The Social Enterprise Academy work with SIF applicants and awardees to identify and resolve specific learning needs which if resolved will help achieve your organisation’s overall goals. For more information on these assessments and how this process works, please click here (link to attachment above as with SROI). 
Q I’ve heard you also carry out Learning Needs Assessments. What are they?
A The Social Enterprise Academy work with SIF applicants and awardees to identify and resolve specific learning needs which if resolved will help achieve your organisation’s overall goals. For more information on these assessments and how this process works, please click here (link to attachment above as with SROI).