Double boost for small business finance: £150m and £4m initiatives will drive inclusive growth across UK

The finance gap faced by ambitious and fundable small businesses in the UK is set to narrow thanks to two new programmes announced by the British Business Bank, Responsible Finance and JPMorganChase.

Thousands of small businesses across the UK, including in areas that have struggled to secure investment, will be able to access finance thanks to the programmes: British Business Bank’s Community ENABLE Funding initiative which will support up to £150m of lending over the next two years and a £4m capacity building initiative supported by JPMorganChase to strengthen community development finance institutions’ operations and more efficiently deploy small business loans.

Both investments will enable community development finance institutions (CDFIs), known for assisting small businesses rejected by other lenders, to support more SMEs in the UK. CDFIs are not-for-profit organisations that support viable businesses which can afford to repay a loan but struggle to access the finance they need from banks and other sources.

While CDFIs lent £102m to businesses last year, they have not always been able to access enough capital to meet demand. 99% of the businesses which borrowed from CDFIs in 2023 had previously been declined by another lender; despite this, 89% of loans issued to small business by CDFIs were repaid in full. CDFIs’ hands-on approach allows them to effectively support diverse businesses, with a significant portion of their loans going to women-led (41%) and ethnic minority-led (24%) enterprises. 98% of the businesses they lent to in 2023 were based outside London and included firms across industrial sectors such as retail, manufacturing, professional services, hospitality, construction, energy and health and social care.

The two new programmes will help CDFIs and their trade association, Responsible Finance, to grow and meet urgent demand from small firms needing loans of £25,000 and above.

Together they are expected to significantly increase levels of CDFI lending to SMEs in communities across the UK, stimulating economic growth, building opportunities and addressing underserved businesses. The programmes seek to grow CDFI lending to businesses from £102m to over £500m per year by 2029, unlocking an extra £1bn for 15,000 SMEs in the UK’s most disadvantaged areas.

The British Business Bank’s Community ENABLE Funding programme, supported by the Department for Business and Trade, is designed to unlock finance across the UK’s Nations and regions, particularly for small businesses which have struggled to access it historically, by delivering and catalysing capital investment into CDFIs.

JPMorganChase has committed £4m in philanthropic support to Responsible Finance’s “Building Foundations, Accelerating Growth” programme. This work will strengthen the operational capacity of CDFIs in the UK – helping to make processes faster and more efficient through technology, working to attract more customers using marketing and communications, and training employees to strengthen leadership.

Gareth Thomas MP, Parliamentary Under-Secretary of State at the Department for Business and Trade said of the Community ENABLE Funding (CEF) programme:

“Access to finance is one of the key barriers to growth for small businesses, and this announcement is a big step towards addressing some of those challenges. Community Development Financial Institutions have that crucial local know-how, the ability to reach businesses that have fallen through the net, and this programme will support many firms to thrive and grow.”

Conor Hillery, Deputy CEO of EMEA at J.P. Morgan said:

“Building on our firm’s commitment to drive inclusive economic growth, JPMorganChase is announcing £4 million in philanthropic support to empower CDFIs with better technology and leadership, enabling them to finance and grow more small businesses. At JPMorganChase, we understand the financing challenges facing small business owners. Non-profit lenders such as CDFIs can play an important role in providing these businesses with much needed financing, however, they often struggle with limited capital themselves and require investments to enhance their systems. Today’s commitment will bolster our ongoing efforts to support a vibrant and growing SME sector, with over £1 billion in financing to SME lenders over the past five years. By aligning with partners like the British Business Bank, we are driving economic inclusion and ensuring SMEs led by women, ethnic founders, and underserved communities can thrive.”

Louis Taylor, CEO, British Business Bank said:

“The support of a finance market leader like JPMorganChase has the potential to provide a major boost to the capacity and impact of the CDFI sector. This £4m investment is a significant one for JPMorganChase to make, and it will provide a strong foundation for CDFI lenders to unlock more finance for smaller businesses in underserved communities. Working alongside the British Business Bank’s Community ENABLE Funding programme, we hope this can help accelerate growth for those types of business across the UK’s Nations and regions.”

Theodora Hadjimichael, chief executive of Responsible Finance which represents CDFIs in the UK, said:

“Many great businesses struggle to get the funding they need, so Community Development Finance Institutions (CDFIs) are a lifeline. They have a long history helping businesses to grow and create jobs but have not always had enough funding themselves to meet demand.

“As many of our small business customers know, you need funding and support to scale up even if you know there is demand. We are delighted to announce this support from our valued partners. This package of lending capital from the British Business Bank and operational funding from JPMorganChase means that CDFIs can grow to turn the tide on the funding struggles that many small businesses around the country face.”

Peter Udale, chair of Responsible Finance said:

“We have been working towards this milestone for the entire CDFI sector for many years. It means CDFIs will be in a much better position to support and fund underserved businesses and social enterprises and drive inclusive growth in all corners of the UK.”

Programme details: