Banks, government and community development finance institutions (CDFIs) have joined a new taskforce aimed at boosting SMEs’ access to community finance solutions.
The target is to provide an additional £1 billion of CDFI lending over the next five years.
CDFIs are non-profit lenders that deliver debt finance and support to businesses. They are often used by firms that have been rejected for funding by other providers.
The new taskforce’s members are Responsible Finance, NatWest Group, Lloyds Bank, Barclays, JPMorganChase, Mastercard, the British Business Bank and the respected West Midlands based CDFI, BCRS Business Loans.
It is chaired by Bob Annibale, founder and former global managing director of Citi Inclusive/Social Finance and Community Development. The Department for Business and Trade and HM Treasury are part of the taskforce as observers.
Small business minister Blair McDougall MP said:
“This is about harnessing the deep local knowledge and relationships which community development finance institutions bring to small business finance.
“CDFIs are fair and flexible lenders which offer support and mentoring, not just money, to talented entrepreneurs and their businesses. It’s the kind of relationship between lender and business that was common in decades past.
“They have enabled thousands of UK businesses to thrive, especially those in underserved communities. 95% of the businesses CDFIs lend to have been unable to get finance elsewhere, yet the vast majority go on to repay their loans and grow their businesses, unlocking entrepreneurial opportunity, job creation, and business growth.”
“Already, thousands of businesses take their next step every year with support from CDFIs, which offer flexible finance with clear and fair terms designed around real businesses. But we have long called for more referral and other partnerships, and capital to lend, so more viable businesses can access finance and support to thrive.
Theodora Hadjimichael, CEO of Responsible Finance, said:
“When businesses find a community lender, they often wish they’d discovered it sooner. The taskforce has a clear priority, to make it easier for people running small businesses to get the finance they need.
“Big banks and community lenders are coming together to grow the community finance sector, and we want to see this partnership translate into more referrals from banks to CDFIs, more capital to meet businesses’ needs and more awareness, so CDFIs become local household names.
“The evidence is clear that flexible, affordable funding from CDFIs helps small businesses to thrive, take advantage of opportunities and access bank finance in the future.”