What is Cost of Capital?

The cost of capital is the cost associated with taking on a new investment. In this case, when charities and social enterprises take on repayable finance (social investment).
When an organisation receives social investment, they will usually need to pay a return for using the money an investor lends them.
Any social investor making loans expects to lend, and then be repaid. The aim is to cover the cost of lending and any default payments which means the money can be recycled and lent again.