Community Banking. CDFI s working with Local Government and Local Authorities. January 6 th Nigel Trowbridge Company Secretary of MCF

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1 Community Banking CDFI s working with Local Government and Local Authorities January 6 th 2015 Nigel Trowbridge Company Secretary of MCF

2 Midlands Community Finance Who we are MCF Loans is a not for profit community finance business set up to tackle debt and financial exclusion and contribute to wider community and economic regeneration. First Community Development Finance Institution (CDFI) in the East Midlands Set up in May 2003 with support from regeneration programmes, social housing providers and the private sector. We have expanded across the Midlands with additional funding from a variety of other sources enabling more people to access affordable loans So far has delivered over 4 million of affordable loans to financially excluded communities across the Midlands. Repayments are recycled back into the community to help reduce poverty and stimulate the local economy

3 Midlands Community Finance What we do Our mission is to tackle financial exclusion and our main activity is to make loans to individuals, households and businesses who cannot access affordable credit from mainstream banks and building societies. MCF raises funds from a wide range of public, private and charitable sources for lending on to disadvantaged and financially excluded communities. We offer an alternative to high cost doorstep lenders and loan sharks We offer budgetary advice and support at application stage to customers and refer them to relevant organizations for debt and benefits advice. We can open basic bank accounts and help customers access grants for utility bills.

4 A Brief Overview Derby City Council Poverty Profile Report prepared Derby Loans set up by the council with sponsorship st Personal and Business Loans advanced Total Lending exceeds 1m Melanie Elliot becomes Chief Executive 2007 Secured DWP Growth Fund Contract affordable loans st outreach office opened 2009 Recognition - MCF invited to No 10 Downing St Awarded Trusted Partner status with RBS- open bank accounts 2009 Delivered Homelessness prevention fund with Council & HA s Opened at Wellingborough, Corby & Derbyshire Council premises Company rebranded as MCF Loans (Midlands Community Finance) Successful Volunteer programme launched 30people trained Total Lending exceeds 4m & Social Impacts measured 2013 Delivery Partner - Government Start-up business Loans 2013 Joined Derby City Council Credit Union Development group th Loan application completed 2014 Local Support Services Framework partner with Derby City Council Head Office move to Pride Park 2014 Derby City Council awarded Derby Working Initiative funding to MCF to support people claiming JSA, back into work.

5 Our offer to customers Affordable loans to tenants who can t get loans from banks to increase real household incomes and ease financial pressures. Open basic bank accounts for customers and savings accounts Encourage direct debit payments for rent Loans for rent deposits and bonds for landlords to move into accommodation and prevent homelessness Help tenants with budget planning Referrals for debt advice and counselling to CAB and Community Law Service Working with Credit Unions Our target groups and individuals are financially excluded and reliant on high cost doorstep lenders and loan sharks for credit. However by taking a loan with MCF, building up a record of regular repayments and save with a credit union. If they then need to borrow they can do so at a lower rate of interest to reflect their improved credit rating MCF refer customers to local Credit Unions to open savings accounts we complement each other. MCF deliver business start up loans Our offer to Councils & Social Landlords To set up savings and bank accounts in-house for our customers, with the introduction of Universal Credits. The merger of welfare benefits into one monthly payment will necessitate a need for better and more careful budgeting. Private and social landlords have concerns regarding an increase in rent arrears. The social landlords we work with, want to ensure their tenants have accounts that handle direct debit payments for rent. We have invested in a new software system that offers the facility to set up and manage savings accounts and Direct Debits. 70% of our existing staff have banking backgrounds with the knowledge, skills and expertise in house to set up and manage these accounts and associated direct debits payments.

6 Our contribution to the Community Health and wellbeing MCF reduce poverty and the burden of debt faced by low income households by offering affordable loans. Debt can be a major source of stress leading to ill health. Over the last few years, it has become more difficult to access loans, households feel they have no option but to use high cost doorstep lenders, payday loan companies or even worse, loan sharks. Educating people how to manage their money. MCF and local credit unions working with local authorities, have key role in providing access to affordable and responsible lending to the community. MCF believes that by supporting people to mange their own finances and giving access to affordable products, we can increase their self esteem and well being, preventing debt and avoiding stress. Regeneration and growth Our affordable loans have had a significant economic impact by increasing the disposable incomes of poorer households which provides a stimulus to the local economy and community. The money we lend is paid back and recycled back into the communities we serve. Local help for local people. Safer and Stronger Communities We work closely with partners, especially the illegal Money Lending unit to stamp out illegal loan sharks. We encourage customers to come forward with information to make their local community safer and stamp out loan sharks for the long term. Economic Development The CDFA secured 30 million RGF funding in round one and deliver a total pot of 60 million in Business Loans through the CDFI s, creating employment, jobs and sustainable economic growth. Employment and Skills The MCF Volunteer programme creates employment opportunities. See next slide.

7 Our Volunteer Programme Volunteer programme launched in January No funding but seen as an investment in the local community. Reward and recognition is key to retaining the services of volunteers in our organisation. Training is delivered free to the individuals The volunteer commits to 20 hours per month over a min of 6 months. We reward people for their time volunteered We recognise skills gained and reward with Certificates of Achievement. Volunteers trained by MCF move into either part time or full time employment. They have added value to our services and work closely with our staff to support people locally. UK Volunteers - Mandeep graduated from Derby University and volunteered for MCF for four months full time before securing her first full time role. Margaret had a disability, volunteered for MCF for ten months and secured a job as an Usher at County Court. International Volunteers Valerie is French and wanted to improve her English, volunteered for MCF for eighteen months, until MCF received funding to create a permanent position for Valerie. Francesca is Italian and has volunteered for MCF for four months, gaining financial skills. CVS and Local Council feedback MCF creates an opportunity to train people on Office & Customer Service skills in a Financial Environment, improving CV s and enhancing skills for employment. Derby College and Derby University send students to MCF to volunteer and gain skills for future employment. Next Step- Derby City Council has approved 50K for 2015 to enable MCF to expand the volunteer training to 50 volunteers in twelve months.

8 Lending Summary Personal Lending 7027 Loans ( 3.5m) issued Profile - c15% have a disability, 50%+ in Social Housing Current funding via RBS micro-finance fund Historic Business Lending 168 Loans ( 937k) issued Profile - c33% women, 20%+ ethnic minorities, 33% year olds c200 jobs created / maintained as a result of these loans Start-up Business Loans (Government programme) Since Business Lending recommenced in Dec 2013; 42 loans delivered Value of 302, jobs created 107 cases in pipeline

9 Community Banking Challenges Infrastructure and I.T Resources People / Volunteers Competitive advantage - Payday lenders - online applications & smart phone apps, speedy and accessible Investment at the right price? - Loan Capital to create a loan book Grant or loan investment can we re-create an investment pot similar to RGF for personal loans? Cost of investment to create a loan book Price of loans to customers Cost to deliver supportive services Sustainable delivery model Revenue Support to provide a comprehensive and integrated service Cost to deliver affordable loans on average 127 per loan Cost to deliver supportive services Sustainable delivery model Revenue costs = 30% of Capital loan fund Operational Challenges Sustainable integrated service with Local Councils and housing Associations. Accessing I.T within Local Council offices, slow set-up process to create outreach branches Opportunities Large Fines levied against the Wonga s and Banks - Can we lever this money as investment into CDFI s and community banking to create local support for people.

10 MCF & Community Banking Summary Midlands Community Finance has issued over 7000 loans since inception in Total lending well in excess of 4.5 m c300 jobs created/maintained via Business Loans Vast majority of lending in deprived wards within Derby, Derbyshire, Nottinghamshire & Northants Recognised as a leading CDFI in England CEO is a Board member of the CDFA Built strong relationships with private, public & 3 rd sector organisations across the Midlands Local presence, supporting people locally. Significant opportunity to work with Government and L.E.P s

11 Supporters of MCF Alliance for Enterprise Business Loans Advantage West Midlands) Business Loans Barclays Bank BES (Business Enterprise Support) CDFA (Community Development Finance Association) Chesterfield Credit Union Community Action Derby Community Enterprise Derby Co-Operative Bank Corby Borough Council Corby CVS Cross Keys Homes DWP (Dept for Work & Pensions) Growth Fund Derby City Council Derby College Derby Homes Derby Housing Options Derby Telegraph Derbyshire (Nationwide) Building Society DEP (Derbyshire Economic Partnership) DNCC (Derbyshire & Nott's Chamber of Commerce) Derwent Living Derwent NDC East Midlands Financial Inclusion Champions East Midlands Housing Association East Midlands Illegal Money Lending Team East Northants District Council EMDA - Business Loans Esmee Fairbairn Foundation ERDF Business Loans Fair Finance Consortium Home Housing Association HSBC NE Derbyshire District Council Neighbourhood Renewal Fund Orbit Housing RBS (Royal Bank of Scotland) and Natwest Release Financial Charitable Trust Rockingham Forest Housing Association Rolls Royce S Derbyshire District Council S. Derbyshire CVS Spire Homes The Phoenix Fund The Tudor Trust The Wallbrook Group University of Derby Wellingborough Council Wellingborough Homes