11 January 2023: £900,000 to help Responsible Finance and its not-for-profit members serve more financially vulnerable or excluded households
• Package is part of NatWest’s new £5.7m hardship funding to provide cost of living support through partner organisations Trussell Trust, the debt advice sector, Federation of Small Businesses and Responsible Finance
• Not-for-profit community development finance institutions are lenders which serve people who can’t access credit from mainstream sources, helping them avoid loan sharks, save money and build financial resilience
NatWest Group today (11 January) announced new hardship funding of £900,000 to enable the UK’s community development finance institutions (CDFIs) to help people avoid loan sharks, save money and build financial resilience.
Part of a £5.7m package of hardship funding to charities and partners including the Trussell Trust, the debt advice sector and Federation for Small Businesses, it will enable not-for-profit CDFIs to distribute more small-sum loans and hardship grants to people, building on their long track record providing fair and accessible finance across the UK.
CDFI customer numbers doubled last year to 67,000 but demand greatly exceeds the supply of capital they have to lend. The Financial Conduct Authority, MPs from the UK’s three main political parties, the Centre for Social Justice and the Joseph Rowntree Foundation have all called for an urgent expansion in community development finance institutions so people excluded from mainstream credit have better and fairer options available.
CDFIs will use the new funding from NatWest to provide accessible credit which typically saves their customers £200-£300 in interest compared with the only alternatives available to them, hardship grants, tailored financial support and education which boosts their applicants’ incomes, and strengthen their own resilience.
Theodora Hadjimichael, Chief Executive of Responsible Finance, said:
“The cost of living crisis is pushing millions of people whose circumstances mean they can’t borrow from mainstream lenders towards loan sharks and very high interest lenders. Affordable, fair credit has never been more needed, and Responsible Finance providers improve their customers’ financial resilience, not only with credit but by helping them strengthen their finances even if they cannot offer them a loan.
“Community development finance institutions’ (CDFIs’) customers typically borrow around £500 or less and make small amounts of money go a long way. Our members will ensure this welcome support from NatWest goes where it is most needed to help more people improve their financial resilience.”
The funding comes after NatWest consulted with its personal and business customers, charities and strategic partners and is part of a further package of support measures to help people, families and businesses affected by the rising cost of living and inflation.
Alison Rose, Chief Executive, NatWest Group, said:
“We are committed to listening to our customers and partners to understand where they face the most significant challenges, in turn delivering tailored support that provides help where it is needed most. Over the past year, including today’s new funding, we’ve provided around £40m of cost-of-living support to our personal customers and community partners.
“Whilst we are not yet seeing significant increases in defaults or people in arrears, this new package of funding and measures is designed to provide on the ground support to communities, breathing space for customers in difficulty and cashback to businesses to offset continued high energy and fuel costs.
“We know that everyone’s situation is unique, and I encourage customers who are facing difficulty to get in touch with us at the first available opportunity, where one of our highly trained colleagues will be ready to discuss all the options available to help them through this challenging period.”
NatWest announced the new support package at a “Cost of Living” roundtable on 11 January in Edinburgh, featuring a round table discussion attended by Eleanor Russell, Responsible Finance’s Policy and Programmes Lead, Alison Rose, CEO of NatWest Group, and representatives of Christians Against Poverty, Citizens Advice Scotland, the Federation of Small Businesses, PayPlan, StepChange and the Trussell Trust.
Watch this film of Responsible Finance Policy and Programmes Lead, Eleanor Russell, talking about the funding: