The Community Development Finance Association, the umbrella body for Community Development Finance Institutions, has received a £60m investment from the government's Regional Growth Fund to pass on to its members.
The investment includes a £30m grant from the fund, which is administered by the Department for Business, Innovation and Skills, and a £30m bank loan.
The money will be passed on to 35 CDFIs, which lend to businesses in deprived communities, to use over the next three years. The amount that goes to each CDFI will depend on its previous success in developing jobs in deprived communities.
Bernie Morgan, chief executive of the CDFA, said it was the biggest single investment in the CDFI sector and came at a time when CDFIs were struggling to attract funds after the abolition of regional development agencies – one of their main sources of support.
"We still have a lot of questions about this fund," she said. "The next phase is to design the structure. We have relatively little detail about how it will work, or what the terms of the bank loans will be."
The Regional Growth Fund exists to support the creation of jobs in communities where the state is the main source of employment. It will give away £1.4bn over the next three years.