All of the YHD partners:

• Business Enterprise Fund
• Bees Knees Loan Fund
• Goole Development Trust
• Key Fund Yorkshire
• West Yorkshire Enterprise Agency

are Community Development Finance Institutions (CDFIs). Your next question of course is “What are Community Development Finance Institutions?”

The first thing to say about CDFIs is – don’t be put off by the name. They are simply organisations that tackle financial exclusion by lending to businesses and individuals, often in deprived areas, that can’t get finance from banks. Their lending therefore also serves a social purpose.

Not all CDFIs are charities, but they all achieve charitable objectives. Many offer longer term business support services as well as finance. They are “not for profit” in the sense that any surplus they make on their lending and other activities is used to grow and expand their services to businesses or individuals.

All of the YHD partners are lenders exclusively to business.

What does a CDFI look like?
CDFIs have some key characteristics. They:

• Are professionally managed and independent
• Fill gaps in the market for financial services – operating in high risk markets and targeting deprived areas and / or groups
• Aim for a financial return to cover their operating costs and become sustainable, but balance this with their social mission
• Work in partnership with other organisations
• Receive investment from banks and the public sector, but also look to attract additional private sector finance.

What type of product do they offer?
CDFIs offer two primary products – debt and equity . Most CDFIs specialise in one or the other. Some larger CDFIs are beginning to loan money to smaller more locally operating CDFIs who then use this to lend directly to their clients.  Other CDFIs are developing complimentary products like leasing opportunities for businesses or savings options for individuals.

What market or markets do they serve?
CDFIs can serve one or several markets – although often they specialise in just one.

CDFIs typically serve four types of business – micro enterprises, small enterprises, medium enterprises and social enterprises.  Most lending by CDFIs is to micro and social enterprises.

Follow the links to the YHD partners’ pages to check the markets they serve.

CDFIs also provide finance for individuals, This can be for a number of purposes, for example the purchase of domestic items, home improvements, or paying for training courses.

None of the YHD partners lend to individuals for the these purposes, though often their lending is to individuals (rather than “companies”) for business purposes.

Where are the CDFIs?
There are currently about 75 CDFIs in the UK. Whilst a small number of CDFIs have national coverage most are relatively small and cover well-defined geographical areas. Full coverage across the whole of the UK is some way off, but as CDFIs grow they are serving larger geographical areas.

The YHD partners will shortly collectively cover the whole of the Yorkshire and the Humber region. In the meantime, any one of them can point you in the direction of other sources of borrowing in your area.

What do CDFIs lend for?
CDFIs provide loans for a variety of purposes, often lending for uses that the commercial sector (banks, building societies, loan companies) find difficult to assess or consider too risky. For business customers these uses include:

• Building purchase
• Building renovation
• Working capital
• Equipment purchase
• Marketing and advertising
• Gap financing.

How much do CDFIs lend?
Nationally, CDFIs control nearly £569m of capital for onward lending and investing. The average fund size is over £2m, though the majority have funds between £100k and £1m.

How successful are CDFIs?
Latest information from the sector (2007) shows that CDFIs are now providing more than £287m in loans and investments by financing more than 15,000 businesses and people, sustaining more than 19,000 jobs, creating 13,000 more and improving the net incomes of more than 212,000 households. The finance they provide has levered another £330m for the individuals, businesses and areas across the UK that need it most.

All YHD partners are members of the CDFI UK trade association, the Community Development Finance Association (cdfa), which currently represents over 95% of the UK CDFI sector.