The CDFA's manifesto for growth and support of the community finance sector.
In just a couple of years, the financial services landscape has shifted. New regulatory architecture has been created, new government schemes like the British Business Bank have been developed, Labour have set out some of their ideas for reform, payday lending has hit the headlines, and some mainstream bank lending data has been released, albeit on a voluntary basis. But some things have stayed constant: access to fair and affordable finance remains a barrier to many – with CDFIs filling at least some of the gaps.
Our financial markets are still not working well, with too much concentration, limited competition, customer confusion when navigating credit options, and a range of government interventions resulting in mixed success. For individuals, the cost of credit is still high and payday lenders are expanding. Things look a little better for SMEs but for social enterprises, finance is still the number one challenge1 . This is a drag on our economy – entrepreneurs are being held back and there is a dearth of community reinvestment. Meanwhile, policies meant to address failure in our financial markets, such as Funding for Lending or Quantitative Easing, have been criticised for having little impact on these.
But CDFIs are stepping up to fill the gaps caused by market failure, serving record numbers of customers and providing a solution for unserved markets. In 2013, CDFIs received over 95,000 enquiries for finance, nearly double the demand of just four years ago2 . CDFIs lent to over half of these customers, providing ethical finance to businesses and individuals who would otherwise be unable to meet their credit needs: lending to over 50,000 customers, creating and protecting 17,000 jobs, creating over 8,000 new businesses and saving 29,000 people from high-cost lenders. Community finance can offer government a vehicle to translate national policies into local delivery, and banks an alternative to supporting customers that they cannot serve.