Big Society Capital establishes £30m fund for Social Lenders
A new £30 million fund for Community Development Finance Institutions (CDFIs) launched to meet the needs of small businesses that create positive social impact in their local communities.
The Community Investment Enterprise Facility, which as been established by Big Society Capital and is managed by Social Investment Scotland, will meet some of the capital needs of CDFIs, help build a better understanding of their lending, and test models of funding for CDFIs to attract other social investors.
Social Investment Scotland, as one of the largest CDFIs in the UK, is delighted to be working with Big Society Capital on the Community Investment Enterprises Facility. Since being established in 2001, SIS have built up a deep understanding of the needs of disadvantaged communities, and the vital role that small businesses play in the creation of both economic growth and social impact.
In disadvantaged communities, small businesses are crucial, both as employers of local people and drivers of economic growth/activity. Many are unable to access mainstream finance to sustain and grow their businesses even if they are creditworthy. CDFIs play an important role in providing capital for these businesses.
“The CDFI sector has already achieved a great deal, and it has even more potential to meet the need of small businesses in the communities they serve. Together with our partners, we believe we can realise this potential, principally through our capital but also building knowledge and convening stakeholders”
Rebecca McCartney, Investment Associate at Big Society Capital
Big Society Capital has commissioned the Centre for Regional Economic and Social Research at Sheffield Hallam University to evaluate the facility over its duration, in order to provide a more robust evidence base for CDFI lending.
Alastair Davis, Chief Executive of Social Investment Scotland
“This new facility, delivering capital at scale, is an important next step for the CDFI sector as a whole, and starts to align growth with more established CDFI movements in the USA. In 2015, we were the first CDFI outside the USA to receive an independent CDFI credit rating from Aeris and in rolling this methodology out further in the UK in line with this facility, hope that the sector will attract greater attention and credibility with mainstream investors.”
The Facility will initially invest in up to five CDFIs across the UK. It is anticipated that the first round of investment will be into partners who helped to develop the Facility, with the intention to expand the reach over time through this facility or by future initiatives.
For more information, visit www.communityinvestment.co.uk