The Rt Hon Rishi Sunak MP
Chancellor of the Exchequer
1 Horse Guards Road
Westminster
SW1A 2HQ
17th March 2020
Dear Mr Rishi Sunak,
Vulnerable small businesses need additional targeted emergency loan funding delivered through responsible finance providers
The responsible finance industry offers its support to you at this time of crisis and we ask that you act now to ensure that small businesses vulnerable to the disruption from coronavirus and an economic downturn are able to access additional loan capital. We welcome the announcement in the Budget of the Coronavirus Business Interruption Scheme, however for it to be effective, this government-backed guarantee must operate alongside an additional loan funding allocation for small-businesses delivered through responsible finance providers.
Responsible finance providers already have the infrastructure in place to channel government funding quickly into the businesses in the communities which need it most. They have demonstratable efficiency and are excellent value for money in converting public funding into capital that is used to both leverage further private investment and recycle repaid capital into new loans. A consortium of national lenders would ensure full coverage of the UK’s regions.
Responsible finance providers – otherwise known as Community Development Finance Institutions – are non-profit lenders which provide affordable loans to small businesses not supported by mainstream finance providers. They have over twenty years of experience delivering government programmes including the Regional Growth Fund and Start-Up Loans. They are experienced in leveraging in capital from UK banks to match Government funding programmes and utilising the Community Investment Tax Relief alongside the Enterprise Finance Guarantee scheme. In 2019, responsible finance providers lent £171 million to thousands of credit-worthy businesses and social enterprises rejected by or unable to access finance from mainstream banks.
As Chancellor, you have the power to unlock investment to ensure the small businesses who drive our economy have the resilience to continue to operate through this period of economic and social instability. The responsible finance sector is ready to provide the government with the tools to do so.