Thousands of small businesses will benefit from reforms to small business finance announced by the Government and new commitments to the community finance sector by JPMorganChase and BNY.
Expansions to the British Business Bank’s Growth Guarantee Scheme will support the scaling up of community lending through the Community ENABLE Funding programme (CEF). CEF is already helping CDFIs to increase access to finance for underserved small businesses.
And the Government has underscored the importance of the community finance sector, recognising the vital role CDFIs play in supporting businesses and entrepreneurs who struggle to access mainstream finance, and the value of the Community Finance Partnership Taskforce which brings together banks, CDFIs and government to strengthen small business finance in partnership.
This week, Community Finance Partnership Taskforce members JPMorganChase and BNY announced new commitments to the community finance sector:
JPMorganChase, a founding member of the Taskforce, announced a total of £10 million in philanthropic funding to help build the operational capacity of the community finance sector, enabling more lending to small businesses. This announcement builds on the firm’s two decades of experience supporting CDFIs in the US and its long-standing commitment to a vibrant SME finance ecosystem in the UK through both financing and philanthropy, including £4 million in philanthropic funding to Responsible Finance in 2024 to build the operational capacity, technology and leadership of the CDFI sector, an essential part of what is needed to deploy capital at scale.
And the US bank BNY announced financial support to build the operational and data capacity of the UK community finance sector.
The Government also announced that the Taskforce will publish a new Roadmap early next year, setting out how it will further strengthen CDFI funding, resources and capability, while improving routes for businesses turned down elsewhere to be directed towards community lenders.
Responsible Finance CEO, Theodora Hadjimichael, 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, and increased their small business lending by 28% last year, but have not always been able to meet demand.
“The Growth Guarantee Scheme (GGS) and the Community ENABLE Funding programme are fundamental to enabling and growing CDFI lending: some CDFIs accredited for CEF have already doubled their SME lending. And GGS will be crucial as CEF seeks to crowd in additional private capital for CDFIs to lend to businesses that cannot access finance elsewhere.
“Strengthening the operational capacity of CDFIs goes hand in hand with increasing lending capital. It will mean CDFIs can support more small businesses, so entrepreneurs can get the right finance at the right time and grow economies across the UK.”
Bob Annibale, Chair of the Community Finance Partnership Taskforce, said:
“Taskforce members recognise CDFIs’ deep local knowledge, expertise in relationship-based lending, and ability to reach great businesses for whom mainstream finance is not the right fit. The Taskforce has expanded its membership, welcoming HSBC, BNY, Unity Trust Bank, Ceniarth, and Better Society Capital alongside founding members JPMorganChase, Lloyds, Barclays, NatWest and Mastercard.
“I am delighted that JPMorganChase and BNY have announced new commitments to the community finance sector, and look forward to more collaboration between Taskforce members to strengthen CDFI funding, resources and capability. This will enable capital to reach more small business that create jobs, power communities and drive economic growth, with the aim to unlock an additional £1 billion of SME lending over the next five years.”
What next?
- Read about CDFIs’ impact for small businesses in our impact report
- Read the Government announcement here