What are we doing to help finance the future economy?

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In the context of economic uncertainty, community businesses are at the forefront - but they need support too. Find out more about financing the future economy.
20 May, 2024
Matt Fazal

Matt Fazal

Portfolio Manager

If you ask a community business leader what keeps them up at night, the answer you’re most likely to hear is access to finance. And this is not an issue unique to our sector. Recent British Chambers of Commerce data revealed that 49per cent of small and medium sized enterprises (SMEs) surveyed said that accessing funding had become more challenging over the past three years.  

In the context of economic uncertainty, the cost-of-living crisis, rising interest rates, and the fallout from Covid-19, there has arguably never been a tougher time to be running a business.  

But community businesses are at the forefront of addressing these challenges. For every rising bill for a community business, someone within their community is struggling to keep the heating on in their poorly insulated home. For each time their supplier costs increase, local people are struggling with the growing expense of their weekly shop. Community businesses tackle these challenges head on- they provide free warm space; affordable or free groceries; or simply a place to forget life’s challenges for a little while. 

 

The Bevendean Community Pub (The Bevy)_people outside The Bevy with arms raised

Image: The Bevy in Brighton provides support for vulnerable residents and a place to meet others in their community.

How we’re backing community business 

Yesterday, we launched our paper ‘Financing the future economy: How community businesses can access the right finance to achieve their ambitions’. Its a thorough overview of the finance and funding landscape for community business. The challenges documented may feel all too familar for some. Now feels like a pressing time to put our stake in the ground – amplifying the need for change within the community business sector, and the solutions that could get us there.  

And we won’t be stopping there. This year, one of our three areas of focus is ‘financing the future economy’. We will be advocating for policy changes that will help support and grow the sector, and championing the economic case for community businesses, and their significant contribution to our economy. Our 2022 Community Business Market Survey finds the sector to have a total income of almost £1 billion, and evidence that 56p for every pound spent at a community business stays in the local economy, versus 40p for larger private sector organisations. 

Significantly, we’re bolstering innovative forms of finance within the community business sector.  

Our live investments include: 

  • working with the Community Shares Unit, catalysing the growth of the community shares market from £2.5m in 2009 to £210m in 2023 
  • introducing a significant innovation in grant funding, Match Trading grants, alongside the School for Social Entrepreneurs in 2017, which we continue to back  
  • teaming up with Liverpool City Region Combined Authority and local social economy leaders in 2019 to form Kindred, an organisation that provides interest free loans, that can be repaid in part through social impact. So far, £2m has been invested. 

Unlocking finance, together 

We recognise that although we have achieved a lot in our short lifetime, there is still so much to learn. And we cannot do this alone. We will test solutions to support community businesses access the right finance at the right time, and will partner with funders, social investors, and government at all levels and implement them.  

And finally, every step we take, we will be listening to those voices in the sector. We will back community businesses from the ground up, and advocate for the solutions they need to be able to continue to deliver their significant social, and economic, impact in their communities.