We are pleased to publish the first evaluation report and dashboard of the Community Investment Enterprise Facility by Sheffield Hallam University which shows that community-based lending is reaching left-behind communities and underserved groups.
We are excited by the publication of this evaluation report and its role in developing an understanding of CDFI lending. We hope that it will help to catalyse greater commitment to support the growth of the CDFI sector.
Small businesses can play an important role in society by creating and sustaining jobs for local people and supporting local economic activity, especially in left-behind communities. Yet many sustainable, small businesses in these communities cannot access mainstream finance and remain underserved. Community Development Finance Institutions (CDFIs) are one solution to this problem and have a social mission to serve these groups.
The liquidity and capital needs from underserved small businesses have been heightened during the COVID-19 pandemic due to the lockdown and social distancing measures. CDFIs have played an important part in the financial support ecosystem for these small businesses, by moving quickly and with purpose to approve £24.6 million of loans for 394 small businesses by the beginning of July, backed by the Government’s Coronavirus Business Interruption Loan Scheme.
Big Society Capital has supported CDFIs over the past three years by providing capital, helping increase the evidence base of CDFI lending and convening a broad range of stakeholders to work towards a common aspiration for the CDFI sector.
Today, we’re pleased to publish the first Annual Report, Dashboard and Tableau Data from the longitudinal evaluation that we commissioned from Sheffield Hallam University’s Centre for Regional Economic and Social Research (CRESR) to explore the nature of CDFI lending through the Community Investment Enterprise Facility. We hope by making data and evidence more transparent, it will increase understanding of CDFI lending.
Some of the key findings over the first year include:
- 248 loans were made to MSMEs, totalling £12.97 million. This also attracted co-investment of £6.7 million from other investors.
- The data shows that CDFIs do reach the underserved. For example, 19% of loans were made to female-lead applicants (compared to a UK average of 17%), 16% to applicants from BAME backgrounds (compared to a 5% average) and 41% had been recently rejected for finance from elsewhere.
- Close to 40% of loans were made in the bottom 20% of Index of Multiple Deprivation postcode areas.
Subsequent reports will dive deeper to better understand the long-term impact of CDFIs on left-behind communities.
In 2019, the Community Investment Steering Group issued a call to action to double the CDFI market within the next five years to better serve the needs of small businesses. That aspiration is even more critical today as the UK moves towards recovery from the COVID-19 pandemic.