The Chancellor’s statement and plans for the year ahead contained some positive news for CDFIs, supporting and underlining the work CDFA members have been doing on access to finance, tackling issues of fair and responsible lending, and creating social and economic impacts.
The government’s decision to expand both the New Enterprise Allowance and Start Up Loans programmes underscores how CDFIs have been strongly delivering finance to unemployed and young people to create jobs and reduce unemployment. Demand for this support and services has grown, and the Chancellor has extended and expanded both programmes as a result. In addition to expanding these programmes, the government will be allocating an additional £250m to the British Business Bank to deploy on finance, guarantee programmes, and late-stage VC capital that will benefit SMEs.
The government took more steps to encourage transparency. In addition to mentioning the bank lending disclosure data that will be released in the coming months, the statement proposed requiring banks to share credit data on their SME customers with other lenders.The statement took further measures to remove barriers to SMEs accessing finance, such as strengthening the appeals process, and investigating unfair practices within banks. These proposals complement the work that CDFIs have been doing on using transparency to address issues of access to capital within their markets.
While there was no mention of the Community Investment Tax Relief Programme, the Chancellor introduced two tax relief programmes aimed to raise private investment in enterprises that create social benefits. The Social Investment Tax Relief programme, which will be launched in April 2014, will target both debt and equity investments in social enterprises. Qualifying both debt and equity for tax relief is a step that we think is important to attracting a higher volume and a range of capital to enterprises that make positive social returns.
We think that the government should also reform CITR to incorporate the same flexibility as SITR, and that the British Business Banks’ guarantee scheme should be extended to CDFIs to expand their capacity to provide access to finance to SMEs in hard to reach areas of the country.
We will continue to raise these points with government and lobby for greater support measures and mechanisms for CDFIs.