Record lending to micro-businesses by social enterprise

A social enterprise that offers financial services to people traditionally bypassed by mainstream banks is reporting record lending to small businesses in London.

This week Fair Finance revealed that its loan book to small businesses and entrepreneurs had grown by 100 per cent following the onset of the credit crunch. The results were published after a report by the Federation of Small Business said its members were facing acute shortages of finance from mainstream lenders leading to redundancies and business failure.

Since being set up in 2005, Fair Finance has made loans of £50,000 a year to long-term unemployed people looking to set up enterprises. But in the last 14 months, the social enterprise has made loans totalling £200,000.

'With the credit crunch biting many local businesses find it hard to get access to finance from banks and others,' said Faisel Rahman, Fair Finance managing director.

'We base our assessment on the business and the entrepreneur and lend accordingly. As such our defaults are low and we're finding more and more clients coming through our door.'

Fair Finance also reported a sharp rise in interest from entrepreneurs. Interviews with unemployed people looking to set up a small business had grown from an average of 50 per year to more than 150 over the last 14 months.

Rahman urged the government to do more to provide business support to very small and micro-businesses, claiming existing services target medium sized businesses.