In October 2021, the Impact Investing Institute brought together leading practitioners in the Community Development Finance Institution (CDFI) and small business banking space to discuss how the mainstream UK banking sector can engage more effectively in provision of loan capital in disadvantaged and underserved communities in the UK. 

The CDFI sector could play a central and important role in the Levelling Up agenda, getting capital into underserved markets and supporting truly local economic growth. 

We discussed the relationship between tax incentives and guarantees, the collaborative and place-based approach of CDFIs and their capacity to scale. 

You can read the full write up of the event here, but our key takeaways are: 

  • CDFIs are an eminently investible proposition when coupled with Community Investment Tax Relief (CITR) and existing Guarantee schemes.
  • CDFIs have a similar access to finance problem as the clients they serve – mainstream finance doesn’t take the time to understand their models, and therefore can’t respond to the investment opportunity they present. 
  • CDFIs could scale their lending and support services if there was more capital available to them. 
  • The main message from the CDFI sector to banks was an invitation to closer, more detailed collaboration and engagement: “let’s build back together”.