March 2013: At a time when Banks are reported to be making fewer loans, in spite of government’s “Funding for Lending” initiative, the South Yorkshire based organisation Donbac has provided over £1.5 million of loans to small businesses during 2012.
The Bank of England reported that net lending by banks fell by £2.4bn in the final quarter of 2012 compared with the previous three months.
The Funding for Lending (FLS) scheme, which began in August last year, was designed to encourage banks to lend more money, both to individuals and businesses, and boost the economy.
The bank of England recently told the BBC “Some banks are reducing parts of their lending activities, consistent with the continued adjustment of their business models in the wake of the financial crisis, or responding to state aid conditions.”
Angela Allison Executive Director of Donbac said “ I echo the comments made by Ben Hughes of the Community Development Finance Association, championing the army of ‘community banks’ such as Donbac, known as Community Development Finance Institutions (CDFIs) who are actively lending to small businesses across the country.
Ben said “They know their communities and can nimbly respond to local demand. CDFIs are completely focused on meeting the finance needs of their clients. They want to lend to all viable businesses and are not distracted by adjusting their business model. The CDFA believe CDFI’s need to be included in government schemes such as Funding for Lending. Members can reach the businesses that banks can’t. With the right government support they would deliver real business growth”.
Angela further commented: “In this region, Donbac has continued to serve a growing demand from small businesses. Whilst it would be excellent in future for the government to include CDFI’s in more capital raising initiatives like FLS, this takes time and businesses need the loans now. At Donbac we have already taken opportunity to grow our capital base to meet demand, securing an additional £1.5million to lend in south Yorkshire”.
Recent CDFA research revealed that there is a £6billion hole in the financial system – where demand for credit is going unmet by the mainstream funders.
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Notes to Editors:
- The Donbac Ltd Loan Fund is a Doncaster based lender that has been in existence for some 26 years and is an authorised lender under the Government’s Enterprise Finance Guarantee Scheme.
- The fund is part of the activity of Donbac Limited, an accredited Enterprise Agency, and member of the National Enterprise Network (NEN) and a member of the Community Development Funding Association (CDFA).
- The Fund seeks to assist SME businesses in the wider South Yorkshire region, which have a funding gap i.e. have been unable to raise all the necessary funding from commercial sources or other loan funds. It is not to be seen as a preferred route to normal commercial loans but as complementary.
- Clients also receive pre investment readiness support and post investment advice and mentoring support.
