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The £6billion Finance Gap

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There's a £6billion hole in our financial system. There are over eight million people, businesses and social enterprises that don't qualify for bank finance, but who need credit. That's according to new research just release by the CDFA.

It's the first time we've been able to quantify this unmet demand, and it's a staggering figure. It covers all those viable customers who don't have access to responsibly-delivered, affordable credit

If this demand could be met it would create huge economic and social benefits for the UK - more business start-up and growth, more jobs, a healthier community sector and more people helped out of high-cost debt traps. Just last week there were reports of a payday lender charging over 68,000% APR, and at the moment many families are turning to such lenders because they don't see an alternative.

We can't let this situation continue. Helping these families and businesses isn't just a job for the banks. It is a job for the public, private and community sector, who must come together to develop the solution.

I believe that solution is community finance. Around 60 community finance organisations have been set up over the past 10 years - they emerged to provide fair, affordable finance in communities that need it. But now we know the scale of the problem, we need a community finance sector that is big enough to fix it.

If the community finance sector had the funds and scale to meet just half of the £6billion demand,
  • 180,000 jobs and 51,000 businesses would be created/protected
  • Individuals would save around £1bn in exploitative high interest rate repayments
This research was conducted by ICF GHK and commissioned by the Community Development Finance Association, through the support of RBS Group. RBS recognise that community finance holds the key to filling the gap between the big banks and high-cost, sub-prime lenders.

We now need all the banks to come together to work with government and the community finance sector to increase its size, strength and profile.

Only by working together can we build a fully inclusive financial services industry.

Mind the Finance Gap: Evidencing demand for community finance is available on the CDFA website