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Just Finance can reach out to the excluded

With economic flatlining, concern at the volatility of global markets and fundamental questioning of traditional economic models, there’s hunger for change to the financial services industry.

The gap between the availability of affordable finance and demand from viable, credit-worthy customers (businesses, social enterprises, and individuals) is not only wide, it is increasing:

• 40% of small businesses seeking their first loan cannot get one

• 33% of social enterprises are hampered by the lack of finance

• 38% of underbanked people turn to high-cost lenders

Now is the time to offer a new opportunity to all UK communities, businesses and civil society organisations that are denied access to financial services, services which we know are the foundation for local economic development, social equality, and the basis for economic recovery.

The UK’s community finance sector is the unsung hero of the financial services industry. Community development finance institutions (CDFIs) have been quietly providing community finance to some of ?the most disadvantaged communities in?the UK for more than ten years.

CDFIs are social enterprises that invest in markets underserved by mainstream financial institutions. Alongside economic benefits, they generate positive social impacts, strengthening the social and economic cohesion of neighbourhoods and communities.

At a time when mainstream bank lending is ever harder to come by and exploitative lenders are burgeoning, CDFIs can, with the right kind of sustained and strategic support, play a pivotal role in supporting less-well-off communities and the economic recovery of the nation.

But at the moment, the CDFI sector is too small and has incomplete geographic scope to meet the gap between demand for finance and credit availability.

Although interest in community finance is thriving, many CDFIs have depleted loan funds and are far from being able to serve all communities across all markets in the UK. CDFIs, just like their customers, are starved of access to appropriate and affordable capital to lend on to customers. Few CDFIs are currently achieving financial sustainability.

More support for community finance and community development finance institutions is needed now. Community finance needs to grow. That’s why the Community Development Finance Association has just launched a new, simple and ambitious plan for growth, and is celebrating the innovation that so many CDFIs demonstrate by announcing the winners of our Innovation in Community Finance Awards.

Our vision is that: by 2017, community finance will be recognised as a household concept with CDFIs playing a key part. Banks, government, independent service providers and corporate bodies will all have a stake in increasing access to finance. The principles of social investment will be driving fiscal and social policy, with the Treasury having a dedicated unit that is generating significant community finance wholesale funds.

The CDFA has a central role to play in pursuing social and economic justice by building the CDFI sector. But we cannot do it alone. Fair and affordable finance is an issue affecting all of us. Just Finance provides a simple framework to grow both supply and demand, so all communities have the access to high quality, affordable financial services able to drive wealth creation across the UK.

Join us in creating a shared endeavour to achieve a step change. Here’s our ten-point plan of what is needed to deliver Just Finance:

1. Enshrine government support of community finance as an H M Treasury remit

2. Require finance service providers to disclose lending data

3. Integrate and embed community finance into the larger financial services system

4. Create a community finance partnership scheme

5. Launch a nationwide bank-to-CDFI referral system

6. Support and grow mentoring and advisory services

7. Communicate, publicise and promote community finance

8. Set up a CDFI Fund

9. Drive social investment into the community finance sector

10. Develop an array of specialist funding streams

Please add your voice of support. With the support of government, banks and other key stakeholders CDFIs can be a vital stimulus for the economic and social recovery of the UK.

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