12.02.13
Filling finance gap could create over 68,000 jobs
Unmet demand for finance amongst individuals and organisations that do not qualify for traditional bank funding has reached more than £6billion, according to new research published today by the Community Development Finance Association (CDFA), supported by RBS Group. This compares to the estimated £0.7billion of finance provided by community finance organisations in 2012.
The CDFA estimates that if Community Development Finance Institutions (CDFIs), operating at the heart of the community finance sector, had the capital and scale to fill just half of this gap 68,293 jobs and 38,935 businesses would be created.
To quantify the gap, the ‘Mind the Finance Gap: Evidencing demand for community finance’ report draws on a range of existing evidence to establish the current state and scale of the UK’s community finance sector, both now and in the immediate future. The report considers current demand and supply of finance for each of four audiences (business, civil society organisations, individuals and homeowners).
The report concludes that this scale of unmet demand cannot be met by traditional bank finance but via a partnership of public, private and social investors – through a viable and sustainable community finance system as an established and embedded feature of the UK’s financial landscape.
CDFA Chief Executive Ben Hughes commented:
“The scale of unmet demand is staggering. This must act as a call to action to government, banks, funders and the broad community finance sector. The benefits of filling this gap are obvious: more business start-up and growth, more jobs, more people saved from the debt traps of high cost lenders and more wealthy vibrant communities.
“Last week we launch the Community Investment Coalition, and it is partnerships like this that must show leadership in working together to champion the growth of the community finance market, raise its profile and bring about a stronger public policy framework. It is in all our interests to better meet the needs of those eight million underserved clients and ensure a fully inclusive financial services industry.”
Mind the Finance Gap: Evidencing demand for community finance is launched today as part of RBS Inspiring Enterprise, the bank’s initiative to encourage and support youth, women and social entrepreneurs. Inspiring Social Enterprise aims to support 2,500 social enterprises by 2015, and work in partnership with the sector to improve access to expertise, markets and finance.
Chris Sullivan, CEO of RBS Corporate Banking Divisions, said:
“While many individuals and organisations may not qualify for traditional bank finance, it doesn’t mean we can’t lead a change that improves funding. We believe CDFIs hold the key to filling the gap between the big banks and high-cost, sub-prime lenders. Over the years we have invested heavily in the capability of Community Development Finance Institutions (CDFIs) to make new funding available.
Supporting social enterprise is nothing new to RBS. As a Founding Partner of Social Enterprise UK we’ve worked hard to drive change in the sector for over 10years, creating a micro finance fund to lend directly to social enterprises and promote industry achievements via the RBS SE100.”
The report can be downloaded here
ENDS
Notes to Editors
- In 2012, community finance organisations lent an estimated £0.7 billion. However, the report has found the current potential annual demand for community finance in the UK to be between £5.45 and £6.75 billion, broken down in the following manner:
| Community Finance Market |
Total potential value of annual demand |
Total potential annual number of clients |
| Businesses | £1.3b | 103,000 |
| Civil society organisations | £0.9b – 1.7b | 57,000 |
| Individuals | £3b – 3.5b | 8,000,000 |
| Homeowners | £0.25b | 21,000 |
| TOTAL | £5.45b – 6.75b | 8,181,000 |
- Community finance is the provision of affordable financial services to businesses, civil society organisations, individuals and homeowners unable to secure mainstream finance.
- The Community Development Finance Association (CDFA), through the support of RBS Group, commissioned ICF GHK to produce this report, Mind the Finance Gap: Evidencing demand for community finance, which is available now.
- A summary of the report and further information on RBS Inspiring Social Enterprise is available from www.rbs.com/inspiringenterprise
- The complete research report and further information on community finance is available from www.cdfa.org.uk
- The Community Development Finance Association (CDFA) is the membership body for community finance providers. The CDFA exists to create a thriving community finance industry, which brings social and financial benefits to communities across the UK.
- The Community Investment Coalition is a partnership of national organisations, which aims to increase access to affordable finance for all communities. It is holding an international summit on 25th January to define a new strategic vision for the sector.
- For more information, please contact Sam Collin, CDFA, [email protected] 020 7430 0222 x207 or Nigel Owen, [email protected]