About 38% of the EU budget is spent on agriculture and rural areas. The funds are used in developing and implementing projects with economic, environmental and social goals targeted mainly at agricultural holdings and small and medium-size enterprises. For the conditions in Bulgaria, the investment in social entrepreneurship may become a key factor in providing employment and development of entrepreneurial initiatives leading to sustainable rural development. Social entrepreneurship is a paradigm that can be seen as one of the solutions to reduce poverty, migration, depopulation and retention of the working population in rural areas. The research aims to reveal the role and benefits of social entrepreneurship for sustainable rural development through analysis of the factors and barriers to its application. It is important in rural areas to create suitable conditions for building social enterprises with a large scope covering all vulnerable groups of the territory. In this context, the logical connection between the factors of social entrepreneurship is discussed which takes into account the peculiarities of rural areas in Bulgaria in connection with its application. Some of the most important factors, challenges, and constraints that have been analyzed are economic, social and institutional. The results show that sustainable rural development can be achieved in solving socially significant problems with the means and approaches of social entrepreneurship and its promotion in rural areas.