Community Development Finance Institutions (CDFIs) are non-profit organisations that lend money to individuals, businesses, social enterprises and charities that can use the money to help develop their local community. CDFIs lend money to people who find it difficult to borrow money from banks and building societies, with lower interest rates than doorstep lenders or loan sharks. Different CDFIs lend in different areas and for different purposes.
CDFIs were launched in 2001. Some are regulated by the Financial Services Authority and all abide by the Community Development Finance Association’s code of practice. Last year CDFI’s made approximately 1,500 loans worth £24m to start-ups and established firms turned away by the banks. This funding helped to create 720 new businesses and safeguard a further 720 businesses and 3,500 jobs.
This type of funding is risky for the lender and interest rates charged reflect this. Loan sizes vary but are typically between £5,000 and £20,000.
There are 62 CDFIs in the UK, spread all over the country and fund different types of projects.
Please contact Pegasus Funding Resources for contact details of those in your area.