Oven-Ready Solution to Distribute Loans to UK's SMEs
Back in May, I put out a call to action for us all to continue campaigning for fairer access to finance for the region's SMEs.
In it I explained why I believed the distribution of The Banking Competition Remedies Fund grants to challenger banks and fintech startups was misplaced and unfair. Now comes news that one of the recipients, the digital bank Starling, has so far lent less than 1% of the amount it promised to small businesses, raising questions over whether it can meet its ambitious £1bn target by 2023.
At a time when, according to the Federation of Small Businesses (FSB), 58% of the nation’s SMEs expect prospects to worsen over the next three months, this news is far from encouraging. How different it might be if the funds, established by the British Business Bank to enable the provision of banking services for SMEs that address service issues experienced by customers of the big five banks, had been given to the responsible finance industry.
You see, unlike fintech startups and challenger banks, our sector has a proven infrastructure in place to drive inclusive growth by reaching the small businesses that mainstream finance excludes. We do not need time to set up channels. Our solution is oven-ready.
Indeed, in 2019 responsible finance providers lent £78 million to over 4,200 SMEs, £93 million to almost 400 social enterprises, £24 million in over 35,000 loans to individuals, and £3.3 million to over 200 homeowners. This has helped start-up new businesses, created and saved jobs and enabled social enterprises to deliver community services, as well as providing an affordable alternative for families who use high-cost credit, and supporting cash-poor homeowners to stay in their homes. We have driven local growth that has been both inclusive and sustainable. You can find out more in our membership body’s annual report.
Here in the east of England, as the region’s only responsible finance provider, Foundation East has lent £9.8m to 608 businesses, creating or saving 1250 jobs and creating a social return in investment of £15 for every £1 we’ve invested. Making similar impacts throughout the UK are: Finance for Business based in Yorkshire; Fredericks Foundation based in Surrey; Enterprise Answers based in Cumbria; SWIG based in the South West; Purple Shoots based in Wales; Key Fund also based in Yorkshire; Business Finance Solutions based in Manchester; Business Enterprise Fund based in Leeds; BCRS based in the Black Country; ART Loans based in Birmingham; Let’s do Business based in Sussex; First Enterprise based in Nottingham and CWRT based in Coventry. You can find your local responsible finance provider here.
What are the chances of the incoming government recognising these achievements and the fact that the best way to meet those small and micro businesses that have been failed for so long by the banking sector is to invest in the responsible finance sector?
Only time will tell.