2 March 2023: Global technology company Block Inc and ethical lender Unity Trust Bank break new ground in impact and place-based investing in the UK with £4m investment into ART Business Loans (ART), one of the UK’s first Community Development Finance Institutions.
Block Inc, the technology company co-founded by former Twitter CEO Jack Dorsey, is making its first social impact investment in the UK, providing £2m capital to ART Business Loans (ART), which is being matched by well-established ethical lender Unity Trust Bank, a long-term backer of CDFIs.
ART, a Birmingham-based Community Development Finance Institution (CDFI), was founded in 1997 to help alleviate poverty through enterprise. ART lends between £10,000 and £150,000 to businesses in underserved and disadvantaged communities which are unable to obtain their full requirements from traditional banks.
Dr Steve Walker, chief executive at ART said: “This deal is a real game-changer for us and a great vote of confidence from such well-established institutions as Block and Unity Trust Bank.
“With the backing and support of these two allies, ART has never been in a stronger position to write the next chapter of our 25-year history.
“This £4 million agreement puts ART on a firm financial footing at a time of considerable economic uncertainty and enables us to continue to provide key financial support to SMEs across the West Midlands, many of whom are currently facing considerable financial headwinds.”
In the last 10 years alone the businesses ART has lent to have created or safeguarded more than 4,000 jobs. Its current portfolio of 170 businesses includes a wide variety of enterprises from manufacturers and tech companies to service providers and restaurateurs.
Block is made up of ecosystems, including Square, Cash App, Spiral, TIDAL, and TBD, with a united purpose of expanding economic access for everyone. The investment comes from its $100m social impact investment fund, which was established in 2020 to support minority and under-served communities, allocating $10 million for social impact investments in markets outside the US.
Amrita Ahuja, Chief Financial Officer at Block, said: “We are thrilled to be making our first UK social impact investment. ART’s efforts to help underserved groups access fair and responsible finance is completely aligned with Block’s mission of economic empowerment.
“We believe fair access to finance is what unlocks opportunities for individuals and communities and are pleased to be able to invest in local programs that further this mission.”
Unity Trust Bank, a thriving commercial bank that is headquartered in Birmingham city centre, has been using banking to improve the lives of UK communities for nearly 40 years. It is a long-standing supporter of CDFIs and has provided ART with £20.4m funding since 2005.
Deborah Hazell, CEO at Unity Trust Bank, said: “Financial inclusion is a key focus for us and we are committed to providing access to fair and affordable finance through intermediaries such as ART.
“Historically, we have supported CDFIs by match funding grant money they have received from local authorities, central government or the European Regional Development Fund (ERDF). This new co-lending partnership is a significant development and we welcome the addition of a corporate investor supporting this underserved sector.”
The announcement comes after the British Business Bank’s 2022 Nations and Regions Tracker found CDFIs, like ART, are a crucial part of the finance ecosystem in deprived areas. And in 2021 the All-Party Parliamentary Group (APPG) on Fair Business Banking described a critical shortage of finance for small businesses, and urged Government to further capitalise CDFIs, which have supported tens of thousands of businesses to grow, but could do more.
Theodora Hadjimichael, CEO at Responsible Finance, said: “Block’s investment breaks new ground for the entire CDFI sector. ART and other CDFIs are business talent-spotters, nurturing entrepreneurs who can’t otherwise get the capital they need to grow.
“It is routine for large corporations in the US to invest in CDFIs, knowing they boost business growth, help create jobs and address regional and demographic under-representation in accessing finance. But an investment like Block’s has been unprecedented until now in the UK, despite our sector’s unique and well-evidenced track record over more than a quarter of a century.
“Nine out of ten of the viable businesses which borrow from a CDFI have been turned down for the finance they need elsewhere, yet most thrive and succeed with CDFI support. This breakthrough investment complements Unity Trust Bank’s valued and long-term commercial relationships with many CDFIs and will unlock business innovation in the West Midlands.”
What next?
- More about ART Business Loans and Unity Trust Bank.