Report: How, and can, a 10x increase of operationally sustainable lending could be achieved by CDFIs in the UK within 10 years.
The Carnegie UK Trust has published new research by Community Finance Solutions, University of Salford examining how the Community Development Finance Institution (CDFI) sector can achieve a step change in growth to make a greater impact on the need and demand for affordable credit.
The CDFI sector provide small loans (around £500) and linked gateway services such as advice and savings to households unable to access mainstream financial services. Customers using CDFIs are among the poorest and most vulnerable households in the UK, such as the unemployed, benefit recipients and single parents. However, the number of loans provided by CDFIs barely registers in relation to the need for affordable credit.
The Carnegie UK Trust commissioned Community Finance Solutions, University of Salford to develop proposals for how, and whether, a 10x increase of operationally sustainable lending could be achieved by CDFIs in the UK within 10 years.
Responsible Finance’s CEO Theodora Hadjimichael said:
“The new Carnegie UK Trust report highlights the critically important role of CDFIs in improving people’s financial wellbeing.
“Looking at the macroeconomic trends highlighted by the authors we can expect the demand for affordable credit to intensify, particularly as commercial lenders continue to exit this market. The report recognises the CDFI sector’s potential and ambition to scale access to affordable credit in the UK – with the right environment and support. We welcome the recommendations, which would increase investment into the sector and therefore its ability to reach more people, and support this through our advocacy for a tax relief for personal lenders.
“This robust and welcome report scrutinises the CDFI business model and impact; we must all act on its recommendations to increase access to affordable credit from CDFIs for those who need it.”
The report can be downloaded here.