Loans to charities and social enterprises grew to a record £4.72bn last year as the UK’s total social impact investment market topped £13bn, according to estimates from Better Society Capital (BSC).
Social impact investor BSC’s report, published today, shows that the market overall grew by over 17% year-on-year, from £11.2bn in 2024 to £13.2bn in 2025.
This is more than £5bn of growth over five years, and in line with BSC’s ambition to reach £10-15bn by 2025.
Social lending, which involves loans to charities and social enterprises, increased by 8% year-on-year to £4.72bn, which marks a more than five-fold increase since 2011 (£826m).
Elsewhere, social and affordable housing investment increased to £7.29bn, now forming 55% of the overall market, while impact venture investment exceeded £1bn for the first time.
Meanwhile, social outcomes partnerships have declined in recent years to £6m in 2025, making up less than 0.1% of the market.
Lending and charity bonds
Social lending contributors named in the report include CAF Bank, the Barrow Cadbury Trust and Joseph Rowntree Foundation.
As part of the £4.72bn, bank lending (loans made to charities and social enterprises by dedicated social banks) grew by 5% year-on-year to £3.1bn in 2025.
Most of that growth came from “a substantial increase in new lending at one of the largest social banks”, the report says.
The report finds that across the rest of the segment, the picture is steadier, with several banks lending less last year than in 2024 “even as their outstanding books held broadly flat”.
It says bank lending remains highly concentrated, with the two largest social banks holding around 70% of all outstanding bank lending to the sector between them.
At around 1,990, the number of charities and social enterprises borrowing from social banks remained unchanged.
The report says “the increase in lending value reflects larger loans to a stable base of borrowers rather than a widening of access”.
Non-bank lending (debt finance taken on by charities and social enterprises to provide working capital and growth finance) rose by 31% from £699m to £913m, with deal flow up 45% to £287m.
This is the strongest growth rate anywhere in social lending, according to the report.
Meanwhile, charity bonds (tradable loans that allow larger charities to raise large-scale unsecured finance with fewer restrictions than bank finance) remained broadly flat.
The report shows that this area was down 1% to £746m in 2025, with only £4m of reported deal flow.
