We need to say to banks: Come to us and invest in the UK communities that need it

Joshua Meek Chief Impact Officer, Unity Trust Bank

As a senior leader at leading social impact bank, Unity Trust Bank, Joshua Meek has worked across social investment to develop mainstream finance to serve places and communities it usually misses. Unity has provided lending into the Community Development Finance Institutions (CDFI) sector since 2001 and has been a long-standing partner to the innovative blended finance programmes with Access. 

“Every loan we offer supports organisations to deliver positive, social, economic, or environmental impact in their communities. Customers choose to bank with us because they know their money goes towards delivering positive impact aligned to their values.

“We’ve been lending to community development finance institutions (CDFIs) for nearly 25 years. CDFI’s support organisations in their local communities that can’t access mainstream finance. But there’s a specialist group within the sector supporting social enterprises and charities who create long-term change for left behind communities that need more support, not less support. Those are the kinds of lenders Access supports by blending in flexible grant funding, making it viable for banks like ours to invest alongside.

“For mainstream banks, the main considerations are risk, return and size of the loan. And then there’s the profile of what customers need.  CDFIs, many of whom Access support, work with customers who need flexible structures that change over time, and that makes the loan more complex and is hard for commercial banks to deliver unless the loan amount is high.

“Unity cares about the impact, risk and return and our loans range from £250,000 and goes up to £20 million or more. But lots of social enterprises want to borrow much smaller amounts .Because of these gaps in financial provision, in some cases people have had to resort to using their credit card just to be able to keep operating and having an impact. 

“If you want to reach the people who’ve been left behind, you need time and space to do it properly, and Access gives us that. They are an anchor point of knowledge and actively listen to all actors to find good solutions for making sure capital is better structured, lower risk and focused on meaningful community impact.

“That means social lenders have the space to design financial products to be the best fit they can be. And community organisations, whether that’s a charity working with excluded young people or a social enterprise delivering nature-based solutions for wellbeing, can get investment-ready. Founders and leaders now get to funders who understand them and who can offer smaller, more complex loans at a competitive rate at the scale they need.

“Access also understands that if you’re asking a small charity or enterprise to prove their commercial model and also prove their impact, you’re creating a double burden. So they provide support for that too. 

“They are very good at designing solutions that work for all sides. They’re always taking feedback, building community and adapting their models, which is rare. Lots of funders just drop in their product and expect people to take it or leave it.

It’s clear we need social investment solutions to come from the people who have had personal experience of the challenges they aim to solve. We need blended finance to make space at the table for community-led solutions, while still meeting the requirements for a good investment.

“In future it would be great to see Access doing even more to actively bring commercial investors into the market. Right now, CDFIs are often expected to go out and find that funding themselves. But Access is in a strong position to lead the effort and make the case to mainstream finance.

"Banks hold billions in assets. If just 0.1% of that was invested into this part of the economy with the right support and structure, it could have an outsized impact compared to almost anywhere else in their portfolio.

“We need to say to banks and to big institutions who care about community benefit that lending and investing into the impact investing sector and the CDFI sector can deliver real impact where it’s needed. One type of organisation we could engage is universities. Students care how their university uses its money -  instead of a standard savings account, they could invest in one of Access’s community lenders.

“Blended finance allows us to take a bit more risk than we would historically, as individuals or institutions. And when we take that risk, it tends to go to organisations who create inclusive growth where it’s needed rather than assuming it’ll trickle down from the top. 

“We’ve seen challenges of growth and stagnation in the UK and institutions who want to see their money deliver positive impact in communities. Any institution with the assets or money to invest in inclusive UK growth should be considering how blended finance and working with the impact economy could deliver the outcomes, risk and return they’re looking for. By working with organisations like Access to find the right solutions through blended finance, we can drive a sustainable change for all.”