Every day, staff in CDFIs across the UK meet to tackle the question: “How can we enable people, businesses, and social enterprises who are beyond the reach of mainstream banks to thrive?”. Two weeks ago, we brought the sector together to do this collectively at Responsible Finance’s annual Member Day.
On November 27th, over 130 community finance professionals gathered in Liverpool to celebrate achievements, share knowledge, and strengthen connections—all with the aim of expanding access to life-changing finance for individuals, small businesses (SMEs), and social enterprises.
The day featured two transformative announcements (video here) which will significantly increase levels of CDFI lending to SMEs in communities across the UK:
- First, the British Business Bank’s £150 million Community Enable Funding Scheme, which will unlock finance across the UK’s nations and regions by delivering and catalysing capital investment into CDFIs.
- Second, the £4 million Responsible Finance “Building Foundations, Accelerating Growth” programme, supported by JPMorganChase, to strengthen CDFIs’ operations and more efficiently deploy small business loans.
These momentous initiatives are complementary, giving CDFIs the capital and capacity to support thousands more small businesses. The next session was dedicated to storytelling and how we explain what we do. For those in the CDFI sector, describing our work to friends and family often results in puzzled expressions. To address this, we ran an informal activity where delegates were asked to introduce the CDFI sector as if speaking to someone with no prior knowledge, aiming to make it resonate.
I once heard CDFIs compared to TV’s Dragon’s Den—but with the dragons replaced by labradors. Businesses led by passionate, dedicated entrepreneurs come in and are put through their paces with rigour. However, instead of contending with fierce, treasure-hoarding dragons, they are met by kind, intelligent, and equally rigorous Labradors:
- Like Labradors, CDFIs have an exceptional sense of “smell.” Their deep sectoral and local knowledge allows them to sniff out businesses with solid foundations.
- Like Labradors, CDFIs are loyal and want to lift people up. They provide tailored support to improve their investees’ success.
- Unlike dragons, CDFIs share their ‘treasure.’ They are democratically owned, run not for private profit but to redistribute wealth and empower communities.
The CDFI sector breathed a collective sigh of relief when Bank of Dave became the second most-watched film on Netflix last year. This heart-warming David vs Goliath story showed the value of local investors gaining their customers’ trust and understanding their market. Like CDFIs, Dave genuinely believed in the businesses he lent to. Millions of people watched this movie and understood the value institutions like “Bank of Dave” and, by association, CDFIs add – why do all banks need to be like supermarkets, when a complementary patchwork of local corner shops can better meet diverse needs.
We hope that CDFIs will become a household name across the UK—not to spare us from lengthy dinner party explanations, but to ensure that everyone who needs them, from individuals to businesses and social enterprises, knows they exist. This decisive vote of confidence from the British Business Bank and JPMorganChase marks a significant step forward, and we are excited to embark on this journey of growth.
View the video of the announcements here.
While these funding announcements are significant, it is important to acknowledge the many impactful CDFIs that serve individuals, social enterprises, and micro-businesses, which are beyond their scope. These organisations remain in need of investment and capacity support to expand their reach and impact.