What did Responsible Finance do for your community in 2017?
Responsible finance providers are a critical source of finance in the UK. We help social enterprises, businesses and microenterprises to contribute to employment and job creation, including in some of the most deprived areas of the UK. We also help millions of individuals now relying on credit to pay essential household bills avoid turning to high-cost lenders. In short, we build financial resilience, and with interest rates already on the rise as we face the fallout of Brexit, we’ll be needing all the help we can get to build financial resilience.
So, what are responsible finance providers?
Responsible finance providers are not for profit organisations that provide loans and business support to social enterprises, small and medium size enterprises (SMEs), microenterprises and people on low incomes across the UK. We are recognised by a trade body, Responsible Finance, as being trusted and transparent. Each region has at least one responsible finance provider. Foundation East is the only Responsible Finance provider of business loans and support across the East of England.
What did the responsible finance industry achieve in 2017?
According to an industry report published by Responsible Finance at the end of 2017, the UK’s responsible finance providers lent £235 million to 61,163 customers last year. That’s 34% more people than in the previous year.
Focussing on the area of Responsible Finance that Foundation East provides, social enterprise loans and business loans £67 million of lending to 5,000 businesses resulted in 4,270 new businesses being created in 2017; 8,053 jobs being created or saved in SMEs and micro enterprises, the backbone of the UK economy. These were all businesses with viable business plans that High Street banks could not help.
Adjusting the lens to social enterprises alone, the Responsible Finance Industry helped to create or safeguard 304 businesses by lending £142 million. This created and saved 4661 jobs.
And this is without widening the lens further to look at how our industry enabled 55,348 people on low incomes to avoid taking on high cost, unmanageable debt by giving them access to £22 million of affordable credit.
If that’s what we can do with our capital reserves, especially in the East of England, dwindling due to reduced public sector funding – can you imagine how your community could benefit if more funding was in place to help us help even more businesses and individuals access affordable finance?
What does the UK government need to do to help the responsible finance industry support more positive social, economic and financial impact?
Well, Responsible Finance has distilled it down, making these three requests of the government:
- Improvements to the Community Investment Tax relief scheme to more easily incentivise greater private sector investment into responsible finance providers;
- A dedicated £150 million responsible finance fund;
- A guarantee that current EU facilities which incentivise commercial investment in the responsible finance industry are replaced, or access is maintained.
This is not much to ask when compared to the support governments in other developed nations provide to the sector.
What can the UK and US responsible finance industries learn from each other?
Well, in short, a lot more than they did last year! This is because, towards the end of last year, the Council of Development Finance Agencies (CDFA) and Responsible Finance established a transatlantic exchange to boost finance practitioners in both nations.
This exchange will help foster better practices, collaboration and learning and a greater understanding of how economic development and infrastructure is financed in the two nations.
I’ll leave the final word here to Jennifer Tankard, Responsible Finance’s CEO:
The transatlantic exchange is a great opportunity for responsible finance providers in the UK to learn from US peers and share our own experiences. We have a special relationship with the CDFA and this new agreement means that by working together we can achieve more than the sum of our parts. Our research, webcasts and visits will enable finance providers to take advantage of learning, funding and training opportunities. This is good news for the businesses, communities and people they serve – those that can’t access finance elsewhere and that need a strong national network of finance providers.”
What can you and your business do to help responsible finance contribute to your community in 2018?
Well, if you live or do business in the East of England, you may wish to invest in Foundation East Community Investment Tax Relief (CITR) shares. Not only will you be contributing to our ‘£15 worth of social impact for every £1 we invest’ success story, you’ll be able to claim up to 25% tax relief on your investment over 5 years. You can invest as an individual, or as a business. To find out more visit our ‘Invest’ page.
I’ll leave the last word here to our recently appointed chair, director of Eastern Savings and Loans and chair of Harlow council’s new environmental and property maintenance business HTS Group Ltd, Mike Harrowven:
Foundation East creates £15 of social value for every £1 we loan. That is phenomenal. That is something I am proud to be a part of. I encourage any business or individual who, like me, is passionate about helping their community in the East of England to thrive, to invest in our CITR shares…”