A new community banking initiative will offer people in Bristol a “viable and integrated alternative solution” to mainstream banking and payday lenders when it launches a pilot phase later this year.
Led by the South West Investment Group (SWIG), the project seeks to also help out local families and businesses. SWIG is developing a community development finance institution (CDFI) that will propose an alternative to “fragmented mainstream finance and support services”.
Organisers say that the BOOST Neighbourhood Finance initiative will assist families who would have otherwise turned to high-interest payday lenders, whilst also lending to small local businesses and enterprises who struggle with financing from the big banks.
The initiative will look to helping people in unemployment move into self-employment, provide expert business advice and support local social enterprises, filling the “service cracks” that mainstream services are failing to provide.
SWIG fund manager Sarah Osborn said, “The aim is to pull together, re-brand and market a package of financial services in order to make them visible and accessible to people and businesses in areas and ways the commercial sector does not reach.”
Meanwhile, Ben Hughes, CEO of the Community Development Finance Association (CDFA) said “We need to address the problems in communities and neighbourhoods across the country that are affected by decades of low economic activity and exclusion from financial services. Our vision is to increase the disposable income in local areas, reduce the market for pay-day loans and doorstep finance, and increase the number and success of enterprises based there.”
Mainstream banks have been under intense scrutiny in recent years following the 2008 financial crash. Most notably, the Royal Bank of Scotland was criticised for “crushing” small businesses in the Tomlinson report, following a large number of businesses complaining that they were pushed further into the red by the bank.
Likewise, payday lenders have been blasted for their part in preying on the poor and the vulnerable, with MPs promising to tackle their “irresponsible practices”, such as offering loans to those would could not afford them without carrying out the proper checks.
The Bristol initiative will launch a pilot phase in September.
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