Question to the Department for Business, Energy and Industrial Strategy:

To ask the Secretary of State for Business, Energy and Industrial Strategy, what steps his Department is taking to work with the community development finance institute sector to create a long-term tool to leverage investment into underserved businesses.

The Government is committed to fostering a strong, diverse and competitive financial services sector to ensure that SMEs can access the right type of finance to meet their needs.

The Government recognises the vital role that alternative lenders, including Community Development Finance Institutions (CDFIs), have played in the provision of credit to SMEs and is grateful for the way the sector has responded during the pandemic. It remains committed to promoting competition and widening the finance options available to UK businesses. We will continue to review our policies and work with the sector through its trade body, Responsible Finance, to achieve those outcomes.

One example of this collaboration is the Start Up Loans programme, whose extension for a further three years was confirmed at Budget. The programme offers loans of up to £25,000 to entrepreneurs and the participation of CDFIs as delivery partners helps to ensure that this opportunity is available to underserved businesses across the UK. 11 of the 21 Start Up Loans delivery partners are CDFIs, and they account for approx. 30 per cent of the loans issued through the scheme in 2020/21.

More widely, the British Business Bank was working with 21 CDFI delivery partners across a range of its programmes at July 2021. These programmes include the Regional Funds and the Recovery Loan Scheme. In addition, 14 CDFIs were accredited lenders for the Covid loan schemes.