Community Development Finance Institutions (CDFIs)
Community Development Finance Institutions (CDFI) are organisations which provide loans and support to people who find it difficult to access finance from mainstream sources.
Businesses can find it difficult to raise finance for a number of reasons: they may have a poor credit rating or history, they can offer little or no collateral, or they may have an insufficient track record or operate in an undeserved or deprived community.
Community Development Finance Institutions provide finance to businesses, social enterprises and individuals who:
- Are unable to access mainstream finance from high street banks and elsewhere.
- Operate in deprived communities.
- Are owned by entrepreneurs from disadvantaged communities.
CDFIs focus on the businesses that are hardest-to-reach: start-ups, sole traders, informal and unincorporated ventures, and microenterprises employing fewer than ten peoples.
Many businesses, especially start-ups and sole traders, but even established microenterprises, have little or no collateral to secure a loan. This reduces their chances of accessing funds from banks. CDFIs recognise this and many make unsecured loans.
More than creating jobs, their objective is also to generate social, environmental and economic returns. In doing so, they are very much social enterprises, supporting the local economies that need help the most.
There are currently around 60 CDFIs supporting customers in all regions of the UK. Each organisation is unique and each serves the needs of the local community.
So what is Responsible Finance?
Responsible Finance represents the national network of Community Development Finance Institutions. Its goal is to support a thriving community finance industry that brings social and financial benefits to neighbourhoods across the UK.
- Engages with government on behalf of CDFIs and the communities they serve.
- Runs a programme of events and networking opportunities.
- Offers members advice, information and consultancy when they need it.