Extra £20m will boost lending to social enterprises

Mandelson announces government cash for community development finance institutions

Community development finance institutions will be able to access an extra £20m of bank lending through a government scheme to help small businesses, business secretary Lord Mandelson promised at a social enterprise summit.

Mandelson told a summit of senior politicians and figures from social enterprise this week that the £1.3bn enterprise finance guarantee scheme, in which the Government will guarantee 75 per cent of a loan to a small or medium-sized business, would support bank lending through CDFIs.

"CDFIs play an extremely important role supporting small businesses and social enterprises in disadvantaged areas," said Lord Mandelson.

"These institutions are an increasingly important source of finance and investment for small businesses and social enterprises that have been unable to access finance from banks.

"These changes to the enterprise finance guarantee scheme will enable more of these institutions to raise additional lending worth up to £20m."

Unity Trust Bank, which specialises in lending to unions and the third sector, responded to the announcement by saying it would be making £5m of its own money available to CDFIs.

"We welcome this new use of the enterprise finance guarantee to support CDFIs and local businesses," said Bernie Morgan, chief executive of the CDFA, the umbrella body for CDFIs.

"The additional capital will be very welcome, as it is urgently needed to support local businesses that have nowhere else to turn in these trying times."

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