CDFA and HACT team up to help residents start up in business
By Callum Anderson, CDFA
06.05.2014
According to the Federation of Small Businesses, ‘one in three entrepreneurs who apply for finance from the high street banks is refused credit.” Without access to fair credit many businesses would not be able to start, survive and grow, jobs would not be created or saved, and social enterprises would not be able to deliver services to their local communities.
In response to this demand for alternative to high street banks, the CDFA has teamed up with HACT, the housing charity, to establish the Start up Microenterprise Project. It will bring together resources from housing associations, Community Development Finance Institutions (CDFIs) and social investors to create a ring-fenced loan fund to support residents, or the local communities they work in, looking to start up their own businesses.
The Start Up Microenterprise Project, to be launched in June 2014, will run for an initial 18 months. It is expected that the project will generate at least £1.5 million of investment, including 10 housing associations or consortia of housing associations investing a minimum of £50,000 each in capital . The CDFA and its CDFI members working on this pilot will then use cocial investors, such as the Start Up Loans Company, to at least treble the value of investment committed by the participating housing associations.
Research by HACT shows that there will be significant economic benefits to this project. Estimates suggest that for each person moved out of unemployment and into self-employment, the Government will save approximately £5,250 per year. Similarly, the local economy will benefit from higher employment levels stimulating demand in local goods and services.
Ben Hughes, Chief Executive of the CDFA said: “We are delighted to be working with HACT on this exciting project. CDFIs are all about building financial capacity and offering affordable loans to help strengthen the economic outlook of communities; housing associations are at the heart of their tenant communities and the wider neighbourhoods in which they are based. That both are mission driven and committed to delivering strong social impacts makes this an obvious and compelling match.”
John Coburn, Network Manager at HACT said: “This is a really exciting initiative that enables housing associations to fund and support their residents to start-up their own businesses. Social housing residents often have great ideas but need help, advice and funding to get started; our micro-enterprise project does this by providing them with the support which they need. The ambition is to create sustainable micro-enterprise loan funds for the social housing sector.”