Community Development Finance Institutions have played a crucial role protecting businesses, jobs and livelihoods in 2020. Many stepped-up their lending almost three-fold earlier this year to help address the COVID-19 crisis and protect viable businesses and social enterprises. Others have made profound adaptations to their business models and how they reach their customers, to ensure they could continue to provide their life-saving advice and support to vulnerable people.
CDFIs have worked tirelessly to support businesses and social enterprises disrupted by the COVID-19 outbreak. Since April 17 of our enterprise-lending members have secured accreditation from the British Business Bank to deliver loans backed by the Coronavirus Business Interruption Loan Scheme (CBILS) to businesses. In the first three months of the crisis they lent 250% more than they had during the same period in 2019, funding businesses in communities all over the UK. Our member Business Enterprise Fund made one of the first CBILS loans and was featured in the Chancellor’s first press release about the scheme.
As of 9th December 2020 our member CDFIs had approved over £57 million of CBILS-backed loans to hundreds of small and micro businesses. Incredibly, this has protected over 6,500 jobs and created a further 500. Our members have all exhibited enormous flexibility at a rapid pace in 2020, without which numerous businesses and jobs would have been lost. CDFIs understand their customers and help them thrive in difficult conditions, start-up, innovate and grow.
The nature of a “guarantee” means some commentators misunderstand CBILS. Unlike banks, CDFIs don’t have access to the Bank of England’s Term Funding Scheme. Guarantees are of enormous use, protecting our capital in the event of a future default, but a guarantee is not a source of new capital. Our members need access to appropriate sources of capital to lend too.
Examples of businesses supported with a CBILS-backed loan from one of our members:
- A safe space for key workers: The Comfort Inn is a quaint hotel that lies on the East Cliffs of Ramsgate and has been welcoming guests for over a century. It was able to remain in action during the pandemic, offering a secure environment for key workers and NHS staff as a result of a loan scheme delivered by Let’s Do Business Finance (LDBF).
- Pure Haus, one of the only developers in the country building houses to the premium ecological ‘Passivhaus’ standard, secured crucial bridging funds from our member the Business Enterprise Fund (BEF) enabling its work to continue – protecting four jobs and helping to create four additional jobs.
- A technology firm whose double-screened laptop monitors are game-changing for remote workers, can expand worldwide thanks to a £250,000 CBILS-backed investment from our member First Enterprise – Enterprise Loans.
- Virtuoso Legal, a leading intellectual property solicitor practice employing 16 people, continues to trade confidently through the COVID-19 pandemic following a £40,000 CBILS-backed loan from our members BEF and FFE through the Northern Powerhouse Investment Fund (NPIF).