What is a CDFI?
A Community Development Finance Institution is a mission-driven lender that helps individuals or businesses who can't get finance from high-street banks or don’t want to be tied down by an expensive and impractical alternatives.
From overlooked to empowered
They exist to tackle inequality and financial exclusion, not to chase profits. That means lending to people others overlook, working in the parts of the country that often get forgotten, and reinvesting any surplus into local communities.
In short, a CDFI is finance with heart.
And the long-term goal? To help clients build strong financial track records, grow sustainably, and ultimately re-enter mainstream lending when the time is right. CDFIs are a bridge, not a destination.
The UK story: where CDFIs came from
CDFIs first gained traction in the early 2000s, inspired by similar models in the US. With backing from HM Treasury, and later through the formation of Responsible Finance (the UK’s trade association for community lenders), CDFIs grew to serve regions, cities, and towns across the UK.
They stepped in where others stepped back, from post-industrial communities to rural areas and coastal towns. Today, they play a key role in the UK’s financial ecosystem, especially for new businesses and underrepresented founders.
They offer essential lifelines in areas with low investment, high unemployment, and limited access to mainstream finance, supporting regeneration and long-term resilience.
Why CDFIs aren’t like banks or payday lenders
Here’s how CDFIs stand apart:
- They say yes when banks say no: Many of their clients have been rejected elsewhere.
- They look at people, not just scores: They assess potential and impact, not just credit history.
- They support you beyond the loan: Business advice, mentoring, financial planning, it’s all part of the deal.
- They’re values-led: Regulated, transparent, and focused on positive outcomes.
- They reinvest in communities: Every penny of profit stays local.
If payday lenders profit from crisis, CDFIs help prevent it. If mainstream lenders back away from risk, CDFIs step in to unlock potential.
By offering fair, accessible loans and wraparound support, CDFIs actively promote financial inclusion, bringing people into the financial system who would otherwise be shut out.
Who do CDFIs help?
CDFIs support:
- Individuals needing access to fair personal loans
- Start-ups who don’t meet bank lending criteria
- Small businesses and social enterprises looking to grow sustainably
- Underrepresented founders who face additional barriers to finance
- Communities with high levels of deprivation or financial exclusion
Whether it’s a young entrepreneur in Preston, a hairdresser in Blackpool, or a food business in rural Cumbria, CDFIs back those with ambition, not just assets.
Many of the people they serve have been excluded by high-street banks because of their background, age, gender, or postcode. CDFIs step in to level the playing field.
Responsible Finance: the wider movement
Most UK CDFIs including us are members of Responsible Finance, the national body that sets standards for ethical lending.
Being a Responsible Finance Provider means:
- Transparent fees
- Affordable interest rates
- Responsible lending practices
- Support alongside finance
It’s not just about the loan. It’s about trust.
What impact do CDFIs make?
In 2023 alone, UK CDFIs lent hundreds of millions to small businesses and individuals creating jobs, launching new ventures, and building economic resilience in the communities that need it most.
They don’t just serve the economy, they shape it.
- Jobs created and protected
- Start-ups launched in left-behind areas
- Business survival rates improved
- Support targeted to those most often left out
That’s the power of place-based, inclusive finance.
And the long-term goal? To help clients build strong financial track records, grow sustainably, and ultimately re-enter mainstream lending when the time is right. CDFIs are a bridge, not a destination.
Finance that backs you, not shareholders
At Business Enterprise Fund, we believe finance should be fair. That’s why we support people with bold ideas, big ambitions, and the drive to make things happen, even if the banks have said no.
As a Community Development Finance Institution and a Delivery Partner for the Government’s Start Up Loans Programme, we offer loans from £500 to £250,000 to businesses who want to grow but don’t meet traditional lending criteria.
Whether you’re just starting out or ready to take your next step, we can help you:
- Launch your business with a Start Up Loan
- Expand with a Small Business Loan
If that sounds like you, let’s talk. This could be the beginning of something big.