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Community-based lending to help transform left-behind communities

Community Investment Steering Group has launched a new report, ‘Scaling Up Community Investment in the UK,’ which calls on the government and investors to enable more positive social and economic impact in left-behind communities. 

According to the report, social and economic impact can be achieved by supporting Community Development Finance Institutions (CDFIs) and targeting small and micro businesses who are struggling to access mainstream finance.

The report maintains that the government must create a supporting ecosystem, where investors can commit to more capital resulting in a potential risk-adjusted return.

In the last five years, £425m has been lent to CDFIs to over 40,000 businesses, allowing the creation or safeguarding of over 72,000 jobs.

As these businesses are often located in so-called ‘left-behind communities’ in the UK, there is a great potential for positive social impact, according to the report.

Bob Annibale, chair of the Community Investment Steering Group said: ‘I’ve seen first-hand the difference community-based lending can make to people’s lives and local communities.’

‘When small and micro businesses that cannot access mainstream lending receive finance it’s transformational, the economic activity generated can tackle the inequality and promote inclusive growth in left-behind communities.’

‘By working together with the Government, investors, and CDFIs, we believe the right environment can be created to bring £250m in lending every year to the businesses that need it most.’

Anna Shiel, head of origination at the Big Society Capital and member of the Community Investment Steering Group said: ‘Big Society Capital believes there is great potential for the CDFI market to bring about significant positive social impact, particularly for disadvantaged communities.’

‘This is why we worked with Citi and others to convene the Community Investment Steering Group, to establish the best routes to achieving capital at scale for CDFIs.’

‘We hope this collaboration will lead to more investments into CDFIs, ultimately resulting in more support for underserved small enterprises across the UK.’

Photo Credit – Pixabay

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