16.03.2012
CDFA news release / opinion piece
As business finance taskforce report ignores community finance, CDFA says Chancellor must act
The organisation representing community development finance institutions – the ‘unsung heroes’ of the banking sector – today expressed disappointment at the lack of acknowledgement of community finance in a new report about widening business access to new and alternative sources of finance.
The report, published by the independent taskforce on non-bank lending, was commissioned by the Government to examine a range of alternative and sustainable finance sources, particularly for small and medium-sized enterprises (SMEs).
The taskforce looked at non-bank finance (NBF) for SMEs at the retail, demand and supply sides, and what barriers to growth of NBF could be identified. Its remit was to look at solutions which could be impended now.
Ben Hughes, Chief Executive of CDFA, said:
“Whilst CDFA welcomes the Government’s desire to examine a range of alternative and sustainable finance sources for small and medium-sized enterprises (SMEs), it’s disappointing that the Taskforce’s report contains a glaring omission – with no reference to community finance. Community development finance institutions are the unsung heroes of the banking sector. For over ten years they’ve provided affordable finance to creditworthy businesses that couldn’t access finance from mainstream providers.
“The taskforce report has made some positive recommendations but has completely ignored the £860 million contribution that community finance has made in providing credit to businesses and microenterprises – and their potential to play an even greater part in increasing the range of finance sources available to small businesses – and helping Britain’s recovery.
“Although the taskforce has ignored community finance, we would hope that the Chancellor would take action now to incorporate community finance into the larger financial services framework.”
The Taskforce report outlines that anticipated growth in demand for finance as the economy recovers, and the expected constraint on availability from banks and other sources, could create a finance gap for businesses of £84 billion to £191 billion over the next five years.
CDFA’s own figures confirm that the gap between the availability of affordable finance and demand from viable, credit-worthy customers is increasing: they say that 370,000 businesses, 3,300 social enterprises and 3 million individuals are ‘financially excluded’.
CDFA’s recently published manifesto for community finance, JUST Finance, has called for a significant expansion in the availability of community finance – and outlined 10 steps Government, banks, and partners need to take to make this happen.
ENDS
Press enquiries: Ian Best, 020 7430 0222 or Jamie Veitch, 07904 272 200
Notes to Editors
1. Ben Hughes, CDFA’s chief executive, is available for interview. Please contact Fabiola Caillaud on 020 7430 0222, Ext 201 or at [email protected].
2. The report from the independent Taskforce on non-bank lending, Boosting finance options for business, can be downloaded from the Department for Business Innovation and Skills website at http://www.bis.gov.uk/businessfinance
3. JUST Finance, CDFA’s manifesto for expansion of the community finance sector, launched on Tuesday 31 January. 370,000 businesses, 3,300 social enterprises and 3 million individuals are financially excluded – but community finance can help them. For more information see http://dev.cdfa.org.uk/about-cdfis/justfinance/ or contact Ian Best on 020 7430 0222, Ext 206 or at [email protected]
4. CDFA is the membership association for community development finance institutions (CDFIs). CDFIs lend money to businesses, social enterprises and individuals who struggle to get finance from high street banks and loan companies. They help deprived communities by offering loans and support at an affordable rate to people who cannot access credit elsewhere.
5. Community development finance institutions disbursed £23m worth of loans to micro-enterprises and small and medium enterprises between April 2010 and March 2011, creating and saving around 1,400 businesses, 5,700 jobs and contributing £170m to the turnover of the UK economy. (CDFA, 2011)