Posted on 14th May 2009
Twenty million pounds in loans will be made available to struggling small businesses in deprived areas, via community development finance institutions (CDFIs), the government announced this week.
Speaking at a social enterprise summit Secretary of State for Business Lord Mandelson announced changes to the government's Enterprise Finance Guarantee Scheme (EFG) to help improve lending to businesses and social enterprises in disadvantaged areas.
Lord Mandelson told the summit of senior politicians and figures from social enterprise that the £1.3bn scheme, in which the Government will guarantee 75% of a loan to a small or medium-sized business, would support bank lending through CDFIs.
The Community Development Finance Association (cdfa) welcomed the announcement, with Bernie Morgan, Chief Executive of cdfa, saying: “We are pleased that the Government recognises the critical role CDFIs play in kick-starting enterprise and protecting our most disadvantaged communities from the worst impacts of the recession. We hope that banks too will recognise this, and take advantage of today’s measures to significantly increase their investment in CDFIs.”
The EFG scheme currently has more than £344m of eligible applications from 3,071 firms that have been granted, are being processed or assessed. And 2,059 firms have now been offered loans totalling over £186m.
Making the announcement Lord Mandelson said: "Community development finance institutions play an extremely important role supporting small businesses and social enterprises in disadvantaged areas."
"In the current economic climate, these institutions are an increasingly important source of finance and investment for small businesses and social enterprises that have been unable to access finance from banks. These changes to the Enterprise Finance Guarantee Scheme will enable more of these institutions to raise additional lending worth up to £20m."
The Cabinet Office, in partnership with the National Endowments for Science, Technology and the Arts (NESTA), has announced a year long Access to Investment Programme to help social enterprises make the most of the new investment that will be available. It will aim to find ways for social enterprises to gain the advice and support they need to access new forms of growth finance.
