21 March 2023: Six Community Development Finance Institutions (CDFIs) have received funding through the Responsible Finance and NatWest Hardship Grants programme.
Our members Adage Credit, Conduit Loans (part of Five Lamps), Fair Finance, Lancashire Community Finance, Moneyline and Salad Money will use the funding to provide small grants to people who have applied for credit but been declined because their circumstances meant they could not afford to borrow. The grants will support people facing potential hardship where a loan is not the most appropriate option.
The CDFIs will make small sum grants of £50 to £100 each to thousands of applicants through the programme, which is funded through NatWest’s £900,000 package to help Responsible Finance and its not-for-profit members provide cost of living support to financially vulnerable or excluded households.
CDFIs are lenders which serve people who can’t access credit from mainstream sources, helping them avoid loan sharks, save money and build financial resilience. Social enterprises themselves, they help applicants strengthen their finances even if they cannot offer them a loan, through tailored financial education, signposting, benefits checkers (which have helped people identify millions in benefits they were due but not claiming) and other wraparound financial support.
CDFI customer numbers doubled last year to more than 67,000 people, but applications are many times this. CDFIs cannot offer credit to everyone who applies because they do not lend if people can’t afford repayments or it would make their financial position worse. But their reach and track record in supporting some of the UK’s millions of financially vulnerable people means they are perfectly placed to distribute hardship grants to households in need of financial support.
Theodora Hadjimichael, Chief Executive of Responsible Finance, said:
“The cost of living crisis is having placing huge pressure on households’ finances. CDFIs have received over half a million enquiries for small sum credit in the past four months but some applicants’ circumstances or financially vulnerability mean it would not be appropriate to lend to them. Our members have always tried to ensure an applicant is better off after they approach a CDFI, whether or not we can give them a loan, by offering tailored financial education and other services. These hardship grants will make a huge difference to households and I’m delighted our members are distributing them.”
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. The £900,000 package for CDFIs will fund hardship grants and a new programme of work to help CDFIs build their own capacity and resilience.