Press release – Tuesday 16 February 2010
As new figures suggest that nearly 60% of small businesses were refused credit by their bank in the last year, the cdfa is calling on the Government to increase its investment in CDFIs to help businesses in the most disadvantaged communities.
CDFIs (community development finance institutions) were set up to lend to businesses in deprived areas that have been denied loans by high street banks. They have experienced an explosion in demand since the start of the recession.
Bernie Morgan, Chief Executive of the cdfa, said: “The Government must take a broader approach to get credit flowing again. It is time to boost investment in CDFIs, which are currently facing unprecedented demand from people who simply have nowhere else to turn.
“CDFIs have been investing in the country’s most disadvantaged neighbourhoods for years, and unlike the big banks they recycle their profits back into those communities. Many of them offer the Enterprise Finance Guarantee.
“But CDFIs themselves are sorely undercapitalised. If the Government is serious about delivering real help now to communities, it should allocate more resources to CDFIs – who will very quickly deliver finance where it is needed.”
With a survey by the Institute of Directors suggesting that 57% of small businesses were turned away by banks in the last year, the cdfa wants to see increased government investment in the CDFI sector so that more businesses can be helped in these difficult times.