Banks lend to the most profitable customers. CDFIs lend to customers that are seen as less-profitable, more-risky. They lend smaller amounts, they build relationships with customers and, in most cases, also provide support and advice. This could be giving money management advice to a customer, or helping a social enterprise with its business plan. It is these value added services that are a core part of the CDFI’s social mission, and a core reason why they are effective at helping enterprises and families.
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News
Ethical lending on the rise as bank lending falls
New research from the CDFA shows that demand for CDFI loans has doubled in the last two years and has now hit almost £1 billion. Continue reading
Families could save £2.1billion with ethical lenders
The seven million people currently using payday and doorstep lenders could save £2.1billion if they used ethical alternatives, according to new research released today. Community development finance institutions (CDFIs) are non-profit lenders that operate across the UK. Last year demand for their services more than doubled.
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Demand for non-bank business loans increases
Non-bank community lenders saw an increase in demand from businesses of 36% in the first quarter of 2013, according to the Community Finance Monitor survey. This bucks the trend reported in today’s Bank of England Trends in Lending report, which says demand for bank credit remained weak in quarter one, and that demand from small businesses fell. Continue reading
Community lenders best placed to deliver £300m boost for SMEs
Vince Cable’s announcement that an additional £300m will be made available to SMEs through the business bank is a welcome and much needed step forward. To ensure that this money quickly gets to where it is needed, community development finance institutions (CDFIs) are the obvious vehicle to make it happen.
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Regional banks needed to restore trust and boost lending – says Ed Miliband
Labour would seek to establish a network of regional banks if elected, to help small business get access to finance, Ed Miliband has said. Continue reading
Charity trustees need help with social investment, says Charity Commission report
Charity trustees need more support and information to become involved in social investment, according to a report written for the Charity commission. Continue reading
CDFIs help Start-Up Loans exceed expectations
2,000 young entrepreneurs have now had their business dreams backed through the Start-Up Loans programme, and community finance providers are playing a key role. The Start-Up Loans Company, which administers the scheme and is chaired by Dragon’s Den entrepreneur James Caan, has helped to start 1,000 new businesses in the last month alone.
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Payday lenders given 12 weeks to change their ways
The OFT has found widespread evidence of irresponsible lending and breaches of the law across the payday sector. The damning report, which follows a year long review of the £2bn sector, said too many people were being granted loans they could not afford to repay, and lenders’ revenues were heavily reliant on customers failing to repay their original loan in full and on time. Continue reading
Banks are making fewer loans, in spite of Funding for Lending
The Bank of England has announced that net lending fell by £2.4bn in the final quarter of 2012 compared with the previous three months.
The Funding for Lending (FLS) scheme, which began in August last year, was designed to encourage banks to lend more money, both to individuals and businesses, and boost the economy.
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