Turning £30m into £89m for under-served businesses.
Since 2012 we have been leading an innovative funding partnership to deliver responsible finance to small and microbusinesses unable to access mainstream finance. The RF Fund programme matches £30 million of Regional Growth Fund (RGF) money with co-investment from Unity Trust Bank and the Co-operative Bank.
The RF Fund is a place-based investment fund that seeks to address inequalities in access to finance and opportunities between different parts of the country and within economic geographies.
The RF Fund’s flexible criteria, for example on loan size, trading history and geography, has allowed the delivery partners to support a wide variety of businesses at different stages of their development along a ladder of growth, creating and safeguarding jobs, the majority of which are in the more deprived communities of the UK.
It is actively delivered on the ground by eleven Community Development Finance Institutions, spread across England, who invest directly in small businesses in some of the most deprived and under-invested areas of the country.
The success…
The RF Fund was tasked with lending £70.4m to small businesses by The Department for Business, Energy and Industrial Strategy (BEIS), and creating or safeguarding 8,746 jobs.
It has smashed its targets to lend £89m, create and save 11,771 jobs, and become a critical part of the finance ecosystem in its eight years of operation. The 2020 Regional Growth Fund Impact Report found that:
- The RF fund has leveraged £45m of further capital from private banks.
- So far it has enabled £89m of lending to viable but unbanked micro and small businesses and social enterprises, exceeding the Government’s target of £70.4m by over a quarter (26%).
- It has created or safeguarded 11,771 jobs, exceeding the Government’s target of 8,746 by over a third (35%).
- 87% of the RF Fund’s investment is outside of London and the south-east (the UK average for SME lending is 62%).
- 16% of RF Fund-supported loans were made to BAME-led businesses and 24% to female-led businesses.
- With an average investment size of £36,000, no minimum loan size, and nearly half of the loans made by the fund in the £5,000-£25,000 range, it fills a crucial gap in access to finance for viable businesses turned down by mainstream lenders.
- The Fund is a successful model of collaboration across the finance sector, now identified as essential to support a “just transition” to net-zero emissions and Build Back Better.
The impact of the fund demonstrates the unique strength of the responsible finance sector in increasing entrepreneurship, supporting businesses in under-served communities, boosting productivity and supporting levelling up.
The full impact report can be downloaded here.
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