BBB launches £150m funding programme for social impact lenders

Posted by Admin November 27, 2024 Bussiness

The British Business Bank (BBB) has launched the Community ENABLE Funding (CEF) programme, with the aim of increasing funding to social impact sector lenders.

The fund will be initially funded by the Department for Business and Trade, and will lend up to £150m over the next two years. After this first phase of funding, the BBB will source additional funding from private sector investors.

The funding will primarily be made available to community development financial institutions (CDFIs) with a focus on increasing the supply of debt finance to smaller businesses that are unable to access finance from mainstream lenders.

“This is an important moment for the social impact lending market and one we’re excited about at the Bank,” said Louis Taylor, chief executive of the BBB.

“The Community ENABLE Funding programme is designed to unlock finance across the UK’s nations and regions for those small businesses who need it but have struggled to access it historically. We hope this can empower local CDFIs to support the communities they’re a part of and generate the desired growth the country needs.”

The BBB added that the social impact sector is particularly important in serving smaller businesses that are led by underrepresented groups, such as females or people from an ethnic minority group.

The social impact sector lent £102m to 4,546 smaller business across the UK in 2023, the Bank said. Furthermore, 98 per cent of the businesses supported were based outside of London.

“Access to finance is one of the key barriers to growth for small businesses, and this announcement is a big step towards addressing some of those challenges,” said Gareth Thomas MP, parliamentary under-secretary of state at the Department for Business and Trade.

“CDFIs have that crucial local know-how, the ability to reach businesses that have fallen through the net, and this programme will support many firms to thrive and grow.”

The funding initialise is supported by Responsible Finance, the National Association of Commercial Finance Brokers, and the Federation of Small Businesses (FSB).

“The Community ENABLE Funding programme will support CDFIs to become a larger part of the funding landscape for small businesses, especially those in underserved communities, and those led by women and people from ethnic minorities,” said Martin McTague, national chair of the FSB.

“By getting to know the communities and areas they are based in, CDFIs can build strong networks of relationships and deep wells of knowledge, allowing them to get funds to businesses who would most likely be turned down by other finance providers.

“The CEF programme’s creation is a significant moment for small firms, and will eventually help thousands of entrepreneurs with big dreams to get the funds they need to invest and grow.”