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 your organisation meets the SIF investment criteria. Those organisations that do will be assessed based on their social impacts, financial viability and sustainability. We are particularly interested in investing in new, innovative and pioneering models of social enterprise.

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: some experience of generating your own income, other than grant; 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.

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 do you mean by sustainability?
A Organisational self-sustainability means the ratio of trading income:operational costs. Trading income means turnover from trading activities not including any element of grant. The financial performance of your organisation should clearly demonstrate that by the end of year five of the plan, sufficient trading income is generated to meet at least 50% of the operational costs of the organisation.

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

Q What can I use a SIF investment for?
A An investment can be used for almost anything, including capital expenditure, revenue funding, marketing, business development or working capital. 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 £500,000. The minimum is £100,000. At least half of this will be loan funding. Please be aware that there should be no expectation on the proportion of the investment that will be made by way of non-repayable strategic investment.

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. Applicants are asked to demonstrate that they have explored other avenues (such as bank or grant finance) in an attempt to secure funding for the proposal in their business plan.

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 7% 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 be 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 over 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 form. 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.

Q You used to use SROI ? is this still the case?
A It is no longer a requirement that a Social Return on Investment report, or SROI, is carried out. We will however, expect you to have fully considered your social impacts and how they are going to be measured. Whilst not compulsory, SROI reports may prove a useful tool for your organisation.

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.

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 What if I also want to apply to the Enterprise Growth Fund or Social Entrepreneurs Fund?
A Scottish Third Sector organsiations should only be receiving support from one of the three Scottish Government Funds at any one time.  Please contact us to discuss which one your organisation is most eligible for at this point in time.