20 October 2021
Kevin Hollinrake MP, co-chair of the cross-party APPG on fair business banking, has written to the Chancellor calling for the scaling up of CDFIs (community development finance institutions).
If no action is taken by Treasury in next week’s Budget, then over 200,000 established businesses will lose out every year and the promise to level-up will be unfulfilled.
Theodora Hadjimichael, CEO of Responsible Finance said:
“Our research shows that 200,000 viable businesses are declined, or discouraged from applying, for finance they need to grow and create jobs annually; this accounts for £4-£6bn of lending each year. A disproportionately high number are based outside London and the South East, and are led by women and Black and Minority Ethic entrepreneurs, yet the government has promised to remove barriers to opportunity through its levelling up agenda.
“CDFIs have a superb track record of reaching businesses underserved by mainstream and challenger banks; 9 in 10 of our customers have previously been declined and 85-90% go on to fully repay their loan and succeed (many then become banks’ customers). The US government is actively using their CDFI sector to invest into places and reduce inequality.
“The Government’s own ministers have praised the impact of CDFI lending. It’s a missed opportunity for the recovery if the Treasury doesn’t allocate funding to the sector now. Scaling-up the UK’s CDFIs could help create over 65,000 new jobs and return £8 to the Treasury for every pound spent – it’s the biggest lever to pull for meaningful levelling-up.”
What next?
- Journalists and media: numerous case studies of thriving businesses supported by responsible finance providers (CDFIs) are available. For case studies or comment requests contact Jamie Veitch.
- More about the All-Party Parliamentary Group (APPG) on Fair Business Banking and its report. Read Kevin Hollinrake’s letter to the Chancellor, and about our proposal.
- Businesses seeking finance: visit www.findingfinance.org.uk