SIS CEO calls for mainstream lenders to support the CDFI sector in Scotland

04 Mar 2024

Social Investment Scotland (SIS) is proud to be a Community Development Finance Institution (CDFI), having been established by the Scottish Government in 2001. SIS is part of a UK network of 'responsible finance’ providers delivering finance to individuals, small businesses and social enterprises that face barriers in accessing the capital they need to balance a household budget, meet an unexpected expense, or scale and grow their turnover.

As well as providing finance to charities and social enterprises across Scotland, in recent years and in line with our strategy to build an ‘impact economy’, SIS has been managing funding programmes that support other CDFIs to raise capital to reach their target markets.

CIEF Logo Small (1)

We have recently embarked on a second phase of the ‘Community Investment Enterprise Fund’ in partnership with Big Society Capital and Lloyds Banking Group. This follow on fund will provide up to £62m of capital to three CDFIs supporting SMEs in disadvantaged communities in England and Wales, in addition to the £66m invested under the first phase of the fund. By the end of the second fund, almost 1,500 businesses will have received vital funding support from this funding programme alone. These businesses create valuable local jobs and other economic activity; we know that many of these businesses are often led by people of colour or women. A mainstream bank providing support to the CDFI sector will really help push the CDFI model into the mainstream.

Originally established in the USA in the 1990s as a place-based response to discriminatory practices of American banks, CDFIs stateside have now emerged as an influential and growing part of the US economy. Successive Presidential Administrations have supported the development of the sector, in particular through legislation that mandates banks to provide support. SIS was originally set up based on US CDFI models, and in my time as CEO, I have repeatedly looked ‘across the pond’ for motivation and inspiration. In fact, SIS was the first CDFI in the UK to secure a credit rating under the Aeris scheme; looking back this was a pivotal moment in our growth.

This latest CDFI investment in the UK is a significant milestone in our development as a sector, however, selfishly it doesn’t help SIS reach businesses in our most disadvantaged communities here in Scotland. It is our ambition at SIS to create a similar fund for Scotland, and we are calling on more institutional investors to follow Lloyds Bank’s lead and invest in CDFIs as a route to building wealth in our communities and helping our small businesses prosper. 

If you’re interested in joining us on this journey, why not get in touch and we can talk more.