Types of CDFI
Business-lending CDFIs
Micro, small and medium businesses often have difficulty accessing the finance they need to help them to start trading or grow. This is because mainstream financial institutions normally refuse to invest in businesses having little or no official track record, or no collateral. CDFIs provide business support, loans and occasionally other types of investments so that these businesses can realise their potential. In addition to serving conventional businesses many of these CDFIs also provide social enterprises. Some also provide personal loans.
Civil Society lending CDFIs
Civil Society is defined as the social enterprise and charitable sector. These organisations often find it hard to raise finance from high street banks as they are deemed too high a risk. A number of CDFIs specialise in serving these organisations. Some operate across the UK but others work on a regional or local basis.
Personal-lending CDFIs
Personal-lending CDFIs help individuals who cannot access credit at an affordable rate from banks or loan companies. CDFIs provide relatively small loans to help meet the costs of everyday needs such as domestic appliances, school uniforms, or returning to work. A growing number of personal-lending CDFIs also offer home improvement loans. They are an affordable alternative to high cost doorstep lenders and illegal loan sharks, which trap people in spirals of debt.
