The finance gap faced by ambitious and fundable small businesses is set to narrow thanks to two new programmes announced by the British Business Bank, Responsible Finance and JPMorganChase.
All three hope to be able to help the thousands of small businesses, including those in areas that have struggled to secure investment, to access finance.
British Business Bank’s Community ENABLE Funding initiative will support up to £150m of lending over the next two years and a £4 million capacity building initiative supported by JPMorganChase to strengthen community development finance institutions’ operations and more efficiently deploy small business loans.
Both investments will enable CDFIs, known for assisting small businesses rejected by other lenders, to support more SMEs in the UK.
While CDFIs lent £102m to businesses last year, they have not always been able to access enough capital to meet demand. A total of 99% of the businesses which borrowed from them in 2023 had previously been declined by another lender. But despite this, 89% of loans issued to small business by CDFIs were repaid in full.
The new programmes will help CDFIs and their trade association, Responsible Finance, to grow and meet urgent demand from small firms.
The ENABLE Funding programme, supported by the Department for Business and Trade, is designed to unlock finance across the UK, JPMorganChase has committed £4 million in philanthropic support to Responsible Finance’s “Building Foundations, Accelerating Growth” programme.
This work, they say, will strengthen the operational capacity of CDFIs in the UK – helping to make processes faster and more efficient through technology, working to attract more customers using marketing and communications, and training employees to strengthen leadership.
Gareth Thomas, Parliamentary Under-Secretary at the Department for Business and Trade, said: “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. Community Development Financial Institutions 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.”
Conor Hillery, Deputy CEO of EMEA at J.P. Morgan said their initiative was “building on our firm’s commitment to drive inclusive economic growth, and Louis Taylor, CEO, British Business Bank said the support of a finance market leader “has the potential to provide a major boost to the capacity and impact of the CDFI sector”.
Theodora Hadjimichael, chief executive of Responsible Finance which represents CDFIs in the UK, said: “Many great businesses struggle to get the funding they need, so CDFIs are a lifeline. They have a long history helping businesses to grow and create jobs but have not always had enough funding themselves to meet demand.
“As many of our small business customers know, you need funding and support to scale up even if you know there is demand.