Ethical lending on the rise in the UK as bank lending falls

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As the Community Develpment Finance Association (CDFA) launches Inside Community Finance, their report into the state of the industry, they reveal that demand for loans has doubled in the last two years and has now hit almost £1bn.

Last year Community Development Finance Instututions (CDFIs), which provide an ethical alternative to high-street banks, helped 2,600 businesses across the UK and created and saved 8,300 jobs. The report from Community Develpment Finance Association (CDFA) highlights the increased demand for CDFI services from SMEs (small to medium enterprises), and their vast and varied impacts despite a challenging funding environment. 

Hull-based caravan manufacturer, Atlas Leisure Homes is one of the many UK SMEs that has accessed finance in this way over the last two years and in the process created 50 jobs from financing through the Acorn Fund.  Andrew Innes, commercial director of Atlas Leisure Homes commented:
 
“There is a sizeable caravan industry in Hull and it had been through a calamitous period. For every 60 jobs we created there is probably another 60 jobs created through the supply chain in the local area. Without the Acorn Fund quite honestly we wouldn’t have got the business operational. They gave us invaluable support at a time when it was very stressful for employees, and the business was uncertain.”
 
In 2012, CDFIs lent £200 million to 33,400 customers and saved 18,850 people from illegal and high-cost lenders.
 
Ben Hughes, chief executive of the CDFA, said: “While Bank of England lending figures show that banks are lending less and less to SMEs, CDFIs have continued to increase lending – helping 45% more customers year on year. They are boosting local economies at a crucial time for the UK and are providing loans and support to businesses where banks have moved away.”
 
The report has been supported by Unity Trust Bank the leading provider of sustainable finance to CDFIs. Peter Kelly, executive director of business development at Unity Trust Bank said: “As both a social enterprise ourselves, and the leading provider of sustainable finance to CDFIs, we're really encouraged by the growing confidence in alternative finance. CDFIs play a vital role in providing finance and support to those individuals and businesses whose access to mainstream banks is limited."
 
Inside Community Finance is available at cdfa.org.uk