CDFA calls for North East businesses to look to alternative finance sector for growth
Over £40m pot available to SMEs, micro sized businesses, and social enterprises in England through Regional Growth Fund
The Community Development Finance Association (CDFA) is calling on North East based businesses to apply to community development finance institutions (CDFIs) to gain access to much needed finance from the Regional Growth Fund (RGF). CDFIs provide vital fair-cost loans to businesses otherwise unable to secure mainstream finance.
CDFIs across England have £40m to lend to local business and social enterprises as part of the Government backed RGF scheme. As many SMEs and social enterprises struggle to access high street bank lending, they are being encouraged to apply for alternative finance lending.
Teesside based CDFI Five Lamps has been lending to local businesses including SMEs and micro-enterprises in the North East for over 10 years. After successfully applying for RGF funding through the CDFA, Five Lamps has issued nine RGF loans with a total value of £256,950 in 2013/14 and a further three loans with a total value of £65,000 in 2014/15 thus far.
Bill Erskine, Director of Economic Development & Finance at Five Lamps, said: “As an organisation we are committed to stimulating employment and growth through access to loan funding and encourage local businesses in the North East to access the money available through the Regional Growth Fund.”
CDFIs in the North East have so far lent £772,690 from the RGF funding, providing 75 loans to local, small businesses, creating and safeguarding 100 jobs.
Ben Hughes, Chief Executive of the CDFA, said:
SMEs together with micro and social enterprises are the lifeblood of Britain’s economy and are an entrepreneurial force working hard to create fertile economic landscapes in their local communities. CDFIs are important lenders stepping up to fill this gap in available finance. We urge small, micro and social enterprises across the country to enquire about loan facilities through our CDFI members. We know there is an appetite for support and we want to ensure a strong capital position for small, micro and social enterprises that are aiding local economic development.
With small businesses creating 60% of jobs and 50% of GDP in the UK, micro enterprises and SMEs are vital to local and regional economies. The funding provided by the alternative finance sector has already secured 2,600 jobs in England, benefitting 699 businesses.
An example of how banks can work together with alternative finance providers, this fund received further contributions of £15 million by both The Co-operative Bank and Unity Trust Bank, to match £30 million from the Government.
Peter Kelly, Business Development and Marketing Director at Unity Trust Bank, said:
Unity is proud to be the leading provider of commercial funding to the CDFI sector. The social economy is a powerful engine for growth and is driving positive social change through enterprise and job creation. Important programmes such as the RGF have enabled CDFIs to provide improved access to affordable finance and Unity is delighted to be playing its part in this success story.
Paul Martin, National Manager of Charities and Social Enterprise Banking at The Co-operative Bank, said:
As a Bank with values and ethics at the heart of our business, we fully understand the important role small businesses and community based organisations play in ensuring our communities survive and thrive. We are pleased that through our continued involvement in the Regional Growth Fund, we can further extend our support to these dynamic sectors through wholesale lending to enterprise CDFIs.
Almost half of loans, by value, are in the West Midlands region, 16% are in the North West, with the remainder disbursed throughout the rest of England.