Community Development Financial Institutions (CDFIs) provide much needed lending and finance to SMEs, social businesses and people who have struggled to access finance from mainstream lenders. CDFIs, which are not for profit community lenders, are increasingly important in improving financial inclusion for disadvantaged communities and businesses, with many CDFIs operating in the most deprived areas. This lending is helping to create new business start ups, enable business growth and safeguard jobs.

Over the last 20 years, CDFIs have expanded in scale by 31 times – growing to serve communities and businesses across the country. This growth will continue with the welcome announcement of £150m of new funding through the British Business Bank’s ENABLE funding programme, channelling new funding to communities and businesses across the UK.

CDFIs have a substantial impact on the development of the social economy through their lending and finance to social enterprises, co-operatives, and community businesses. Responsible Finance, the sector’s trade association, states CDFIs invested £119m into social businesses in 2023, along with £66m in personal lending to over 85,000 customers.

With the Government’s commitment to doubling the size of the co-operative sector, there is a substantial opportunity to expand CDFI lending to co-operatives and mutuals across the country. Specialist CDFIs, such as Co-operative & Community Finance, are already lending extensively to co-operatives, mutuals and employee owned businesses. Other organisations such as Access – the Foundation for Social Investment and the Key Fund have a growing portfolio of lending to co-operatives.

The Co-operative Party believe the role of CDFIs should continue to expand in the delivery of doubling the size of the co-operative sector – along with enabling community energy and community ownership growth. They will be significant partners, ensuring co-operative models can contribute to expand in underserved and disadvantaged communities. The Co-operative Party welcomes the new announcement by the British Business Bank and hopes it will be the start of greater investment into the co-operative economy during this parliamentary term.