JUST Finance manifesto
A new vision for community finance.
“How community finance can offer a solution to local economic development by providing access to credit by more businesses, social enterprises and families across the UK”
Government, banks, investors and the third sector must collaborate and innovate to increase the provision of affordable community finance
JUST Finance aims to build the Community Finance sector to address the growing gap between demand for finance and credit availability faced by small businesses, social enterprises and individuals.Increasingly, government, banks, businesses, and consumer market advocates recognise the value and unique effectiveness of community finance as provided by Community Development Finance Institutions (CDFIs). But many CDFIs are struggling to access the capital and revenue they need to lend to underserved markets – and many communities in the UK do not even have access to community finance.
With a radical transformation needed to provide access to finance in all communities across the UK, the CDFA’s “JUST Finance” manifesto sets out a simple and ambitious plan for growth.
Ben Hughes, CDFA’s Chief Executive, said:
“With economic flatlining, concern at the volatility of global markets and fundamental questioning of traditional economic models, there’s hunger for change to the financial services industry.
“The gap between the availability of affordable finance and demand from viable, credit-worthy customers is not only wide, it is increasing: 370,000 businesses, 3,300 social enterprises and 3 million individuals are ‘financially excluded’.
“The UK’s community finance sector is the unsung hero of the financial services industry. Community Development Finance Institutions (CDFIs) have been quietly providing community finance to some of the most disadvantaged communities in the UK for more than ten years. But the sector is too small and has incomplete geographic scope to meet the gap between demand for finance and credit availability.
“Community finance needs more support, now. JUST Finance provides a simple framework to grow both supply and demand, so all communities have access to high quality, affordable financial services able to drive wealth creation across the UK.”
JUST FINANCE – KEY EXCERPTS:
- Access to finance is one of the biggest drivers of economic growth
- Small businesses, particularly micro-enterprises and start-ups, increasingly struggle to secure credit
|“One in three entrepreneurs who apply for finance from the high street banks is refused credit. For 60% of these this means that they miss out on their growth opportunities.” Federation of Small Businesses Survey of members, Oct 2011|
- The single largest barrier facing social enterprises is access to finance
|“44% of social enterprises say that they are hampered by the availability and affordability of finance” Fightback Britain, Social Enterprise UK, 2011|
- Users of high-cost credit have quadrupled in the last four years to four million customers
|“8 million people (15% of the population) are ‘underbanked’— i.e. excluded from mainstream bank lending and credit cards” Shark bait, The Economist, 8 Oct 2011|
CDFA’s 10-point plan of what is needed to deliver JUST Finance is summarised below.
|1/ Enshrine government support of community finance as an H M Treasury remit 2/ Require finance service providers to disclose lending data3/ Integrate and embed community finance into the larger financial services system|
4/ Create a community Finance partnership scheme
5/ Launch a nationwide bank-to-CDFI referral system
6/ Support and grow mentoring and advisory services
7/ Communicate, publicise and promote community finance
8/ Set up a CDFI Fund
9/ Drive social investment into the community finance sector
10/ Develop an array of specialist funding streams