BACKGROUND: Employment is associated with better quality of life and wellbeing in people with mental illness. Unemployment is associated with greater levels of psychological illness and is viewed as a core part of the social exclusion faced by people with mental illness. Social Firms offer paid employment to people with mental illness but are under-investigated in the UK. The aims of this phase of the Social Firms A Route to Recovery (SoFARR) project were to describe the availability and spread of Social Firms across the UK, to outline the range of opportunities Social Firms offer people with severe mental illness and to understand the extent to which they are employed within these firms. METHOD: A UK national survey of Social Firms, other social enterprises and supported businesses was completed to understand the extent to which they provide paid employment for the mentally ill. A study-specific questionnaire was developed. It covered two broad areas asking employers about the nature of the Social Firm itself and about the employees with mental illness working there. RESULTS: We obtained returns from 76 Social Firms and social enterprises / supported businesses employing 692 people with mental illness. Forty per cent of Social Firms were in the south of England, 24% in the North and the Midlands, 18% in Scotland and 18% in Wales. Other social enterprises/supported businesses were similarly distributed. Trading activities were confined mainly to manufacturing, service industry, recycling, horticulture and catering. The number of employees with mental illness working in Social Firms and other social enterprises/supported businesses was small (median of 3 and 6.5 respectively). Over 50% employed people with schizophrenia or bipolar disorder, though the greatest proportion of employees with mental illness had depression or anxiety. Over two thirds of Social Firms liaised with mental health services and over a quarter received funding from the NHS or a mental health charity. Most workers with mental illness in Social Firms had been employed for over 2 years. CONCLUSIONS: Social Firms have significant potential to be a viable addition to Individual Placement and Support (IPS), supporting recovery orientated services for people with the full range of mental disorders. They are currently an underdeveloped sector in the UK.