Opportunities to support businesses, but little to combat high cost consumer credit
The CDFA (Community Development Finance Association) welcomes elements of the Chancellor’s autumn statement and is encouraged by the acknowledgement that access to finance is key in helping the UK’s economy get back on track. Small businesses are the backbone of Britain, but many of them, especially microenterprises and start-ups, continue to find it difficult to access the credit they need to thrive and grow from banks.
Community finance is designed specifically to facilitate access to finance to businesses unable to secure credit from banks. Therefore, our members, who provide community finance across the country, must be central in these government programmes.
We have identified eight key programmes in the Statement for which CDFIs (community development finance institutions) can help deliver success. These include:
- ensuring that funding flows from the new Business Bank to hard-to-reach entrepreneurs,
- ensuring that Business Finance Partnership’s proposed £100 million tranche of investment aimed at non-traditional channels to reach smaller businesses is realised
- expansion of CDFI participation in both the Start-up loan programme and Regional Growth Fund
Benefits would also be realised through the inclusion of CDFIs in other programmes, such as: an extension of the Enterprise Finance Guarantee scheme specific to the needs to community finance providers; and the Business Finance Taskforce’s new awareness-raising campaign to promote its commitments to improve access to finance.
We welcome codification of the protection of the Community Investment Tax Relief (CITR) scheme from the new cap on unlimited income tax reliefs. CITR is critical in ensuring that private investment continues to flow into the CDFI sector and on to businesses in need of finance.
We are pleased to see the Government’s pledge to work to extend the BBA-CDFA referral scheme to other finance providers, and look forward to working with government to realise success.
CDFA’s Chief Executive, Ben Hughes commented:
“Our members are very well placed to successfully deliver the Government’s aim of getting more finance to the SMEs that need it, and we are pleased to have the opportunity to work with key stakeholders to ensure this happens.”
“I would have hoped to see the Chancellor’s statement include initiatives to further the nascent development of the social investment market and provision to stem the tide of exploitative lending practices by doorstep lenders and payday lenders, a market which CDFIs also serve but are desperately undercapitalised to do so.”
Sam Collin, Communications Officer, email@example.com 020 7430 0222 x207
Ben Hughes, Chief Executive, firstname.lastname@example.org 020 7430 0222
About the CDFA
The Community Development Finance Association (CDFA) is the trade association for Community Development Finance Institutions (CDFIs) that provide finance and support to help enterprises and individuals develop and create wealth including support to disadvantaged communities.
Community Development Finance Institutions (CDFIs) lend money to business, social enterprises, community groups, charities, and households who are unable to get finance from high street banks and loan companies. They often help deprived communities and underserved markets where market failures exist in mainstream bank lending. There are currently around 60 active CDFIs collectively covering all regions of the UK.