For many social enterprises, debt finance can feel like uncharted territory. But for Green Collect, loans have been a cornerstone of their story.
Green Collect started with a loan.
In 2005, the social enterprise—which delivers environmental solutions for surplus office items while creating jobs for people excluded from the workforce— launched with the help of a $30,000 loan from a benevolent fund.
Although they had received philanthropic and government funding to run an initial pilot, it was the loan that allowed them to incorporate and begin operations.
As CEO Sally Quinn tells it, “Loans have always been part of our story. They have been a mechanism for us to access funding to kick-start or begin something new.”
Over the years, loans have remained an essential part of Green Collect’s strategy, fostering growth, resilience, and innovation.
Innovating during a crisis
A loan secured during COVID-19 through White Box Enterprises, highlighted how debt can fuel innovation in challenging times.
With two bricks and mortar shops closed due to lockdowns, Green Collect faced a significant challenge: how to continue reaching customers who still wanted their products.
“When people started working from home, they needed monitors, monitor stands, office chairs. Those three things became our top sellers, but we weren't able to reach those markets through our shops,” Sally recalls.
Their solution was to invest in an e-commerce platform.
The $50,000 loan enabled Green Collect to integrate Shopify into their website, develop new systems, and hire staff to bring their online store to life. The results were transformative.
“That investment increased our income, allowing us to make repayments but also to see growth in the area we invested in. Our ‘re-commerce’ is now core to how we deliver all of our resale,” Sally says.
The power of relationships
Reflecting on the success of that loan, with less than one third of the balance outstanding, Sally highlights the importance of building relationships with lenders who understand the mission and challenges of social enterprises.
"Especially when you’re accessing a loan or debt finance for the first time, entering into that with an organisation like White Box, who truly understands social enterprises —their amazing capabilities but also the unique challenges they face—can make a big difference,” she says.
“A lot of that comes down to relationships, building trust so that both parties can ask hard questions and give honest answers, and building a shared understanding of what this will enable.
“I also think being vulnerable or transparent by laying all the financials open can feel a bit safer when you're working with people you know, or you know are aware of some of the challenges.”
Sally says the commitment to a shared purpose and the social impact also means those conversations can be very energising.
“These conversations aren’t just about getting a loan,” Sally reflects. “They’re about achieving a vision and making the world a better place.”
This foundation proved invaluable when challenges arose. During a tough period with cash flow, Green Collect worked with White Box to secure a repayment holiday, temporarily pausing repayments.
Using loans strategically
One of the most important lessons Green Collect has learned is the need to use loans strategically.
“Debt is not a short-term solution to cash flow issues. It’s a deliberate investment in growth,” Sally advises. “We’ve always seen loans as something that is going to grow our trading income.”
Whether funding new roles, infrastructure, or systems, each loan has been tied to a clear plan for increasing income and achieving long-term sustainability.
Sally cautions against using loans to “fill a hole” in operating expenses.
“You have to have confidence, and evidence, that at some point you're going to make money that enables you to repay that loan,” she says.
“When you get a lump sum, you need to know what you can turn it into, rather than it just being absorbed and lost in general operating costs. Then it becomes a burden rather than an enabler.”
Gaining confidence with debt
Green Collect’s experiences with manageable loans have laid the groundwork for more ambitious borrowing.
In 2023, Green Collect secured a $250,000 loan from one of the big four banks.
“We were confident to apply for a loan of that size, because we'd had the experience with some smaller loans,” Sally explains.
“It gave us confidence to understand the role of a loan at that point, as opposed to grant finance or other types of capital.”
Part of a broader ecosystem
Sally highlights that loans are just one part of a broader ecosystem of funding.
“Over the years, we’ve built a good awareness of the right type of finance for the purpose and the stage of the enterprise,” she says.
“I think back to our first large grant, that was $50,000, and for us that was transformational. It allowed us to really firm up our social purpose and invest in some things that were critical at that point. I know there's other enterprises at that point now, for whom a $50,000 grant would have the same impact.
“But because we're down the track a bit and we've been able to refine our business model and understand our market and our products and services, it's important we see the business running in a way that demonstrates profitability and a movement towards sustainability that enables us to access more targeted finance, such as loans.”
For Green Collect, grants remain important, particularly for initiatives that deepen social impact, while loans are better suited for investments that drive business growth. By carefully matching funding types to their purpose, Green Collect has been able to scale sustainably while staying true to their mission.
A validating experience
Beyond financial support, loans have offered Green Collect something else worthwhile: validation.
Applying for a loan involves rigorous due diligence and commercial scrutiny. When successful, this process reinforces confidence in the business model and planning.
“There’s something quite affirming about being told, ‘Your plan stacks up,’” Sally notes.
Advice for first-time borrowers
For social enterprises considering debt for the first time, Sally offers a few key insights:
- Clarify your need: Be clear about what the loan will fund—whether it’s equipment, infrastructure, or a new role—and how it will drive growth.
- Plan thoroughly: Develop a plan that outlines what impact the investment will lead to and how the loan will be repaid.
- Start small: Begin with a manageable loan amount to build confidence and experience in utilising debt finance.
- Consider working with aligned lenders: Seek lenders who understand the unique needs and challenges of social enterprises.
For social enterprises exploring the potential of loans, Green Collect’s experience is a powerful example of how debt can be a tool for growth and resilience.
With the right plan and partners, loans can open doors to new opportunities and strengthen the foundations of a social enterprise.
If you're a social enterprise that supports employment pathways and you're seeking low-cost, patient capital to grow your business and expand your impact, find out more about the Social Enterprise Loan Fund (SELF). It could be the opportunity you’ve been waiting for.