PRIME business club

The High Street banks are by far and away the main source of start-up loans in the UK. But they won’t always lend to older people, particularly if you have a poor credit history or no collateral. So here we list some organisations that might be worth approaching if the banks have turned you down.

Most are CDFIs - non-profit organisations running a loan scheme to level the playing field for some particular group or to encourage business to set up in a particular area.

Q: What’s a CDFI?
A: A Community Development Finance Institution - a kind of small non-profit bank specifically set up to help those who cannot access money from mainstream banks and building societies. CDFIs in the UK are recognised in law and properly regulated. More from www.cdfa.org.uk

Coverage is patchy. CDFIs are relatively new in the UK and have not yet reached many parts of the country. Because CDFIs generally will only lend to those turned down by conventional banks they don’t compete with them, instead reaching out to customers the banks don’t serve. As a result the big banks generally don’t see CDFIs as rivals, and indeed have actively supported some CDFIs in getting established.

Typically the loans available from CDFIs are “loans of last resort”. You often have to have been turned down by a regular bank before you can apply. Interest rates are usually similar to those you would have to pay for a business loan from a conventional bank, but they do vary considerably - from a low of 3% to a high of around 30%.

Loans from even the most charitable CDFI are still loans that need to be paid back to keep the fund going - they are not grants. So the businesses people are proposing have to be sustainable and viable in exactly the same way as if you were approaching a commercial bank.

The CDFI will check out each application in businesses terms - indeed possibly more thoroughly than a conventional bank would, because the applicant usually isn’t putting up collateral such as a valuable house.

This makes getting a loan through schemes of this type generally slower than going to a bank. CDFIs are interested in whether the business will succeed, not just in how much your house can be sold for should it fail,

You can find a much longer list of CDFIs - many of them serving very specific geographic areas, from the CDFA, which is the sector’s umbrella body. Here we concentrate on an illustrative selection known to PRIME. Those indicated as PRIME partners have a specific commitment to helping the over 50s set up in business.

Aspire Micro Finance
Available in: Belfast, Newtownabbey, Mallusk, Lisburn and Derry/Londonderry areas of Northern Ireland. Aspire uses a micro-finance approach for deciding who to loan to, which means that it first lends small amounts to establish trust. If they are paid back on time you can apply for larger loans. Aspire prefers to deal with clients who are already trading, even if just in a small way.

Bristol Enterprise Development Fund
Available in: Bristol, Bath and the rest of the former county of Avon. Won’t lend to businesses involved in gambling, drinking, clairvoyancy or any activity which may offend public taste. Does do expansion loans for firms that have been trading for more than 12 months, as well as start-up loans.

Capitalise Business Support
Available in: Sussex including Brighton & Hove, and parts of South Kent. Capitalise is a subsidiary of Ten Sixty Six Enterprise Limited, the local enterprise agency for Hastings and a PRIME partner.

Cumbria Community Asset & Reinvestment Trust
Available in: Cumbria.

Derbyloans
Available in: Derbyshire within 20 mile range of city of Derby.

DSL(Developing Strathclyde Ltd)
Available in: Glasgow, Ayrshire, Dunbartonshire, Lanarkshire, Renfrewshire areas of Scotland. DSL just does loans. More general business advice in this part of Scotland is available through Business Gateway

East London Small Business Centre
Available in: Tower Hamlets, Newham, Redbridge, Barking, Havering and Dagenham. Maximum loan amount depends on borough. Has a special scheme for fashion, clothing or arts businesses based on financing orders. Also operates an interest-free Muslim loan fund for clients in Tower Hamlets and Newham.

First Enterprise Business Agency
Available in: Nottingham and the East Midlands generally. Available for expansion as well as start-up, the loan primarily targets ethnic minorities and the socially excluded - which can included those excluded by age from accessing traditional bank finance. First Enterprise is a PRIME partner.

Foundation East
Formerly known as Suffolk Regeneration Trust, Foundation East offers loans for amounts between £3,000 and £50,000 to small businesses and social enterprises in Suffolk. Startups will normally have to find at least 50% of the money elsewhere.

Fredericks Foundation
Available in: Berkshire, Hampshire, Isle of Wight, East and West Sussex, Surrey and Wiltshire – (currently in the Swindon area only). Gives priority to the unemployed, disabled and financially very hard up. The Foundation is a PRIME partner.

GLE oneLondon
Available in: Greater London. Greater London Enterprises oneLondon runs several schemes, including a growth loan and an equity finance scheme involving angel investors. Businesses setting up in certain highly-deprived areas can apply for larger loans - there’s a post code checker on the link above.

HBV Enterprise Centre
Formerly kown as Hackney Business Ventures, the centre has loans available for both start-up and existing small businesses in the London Boroughsof Barnet, Brent, Camden, City of London, Enfield, Haringey, Hackney, Harrow, Islington, Waltham Forest.

In Credit
Available in: Stevenage, Hertfordshire and surrounding area. In Credit is a PRIME partner.

Merseyside Special Investment Fund
Available in: Most of Merseyside including Liverpool, St Helens and Birkenhead. Map on link above. Also does business expansion loans.

Northern Pinetree Trust (Disability Specialist)
Operates the Spirit of Enterprise loan fund for people with disabilities. This can make loans of up to £5,000 for start-up or business expansion in County Durham, Tyne & Wear, Northumberland and the Tees Valley.

NWES Advance
Available in: Norfolk and Suffolk. NWES (Norfolk and Waveney Enterprise Services) is a PRIME partner.

Partnership Investment Finance
Available in: specific areas of Yorkshire and The Humber (about half the region). There are maps and a post-code checker on the link above.
PNE Group
Available in: Newcastle, Gateshead and other parts of North East England. Project North East, part of the group, is a PRIME partner.

South Coast Moneyline
Available in: Portsmouth and the Solent area

South West Investment Group
Available in: South West of England. SWIG operates several different loan funds with different terms for different areas (like many CDFIs SWIG gets money from a variety of sources and these can effect eligibility criteria). For example there’s one fund for West Dorset and another for Cornwall and the Isles of Scilly. But the Phoenix Business Development Fund is available throughout the South West region, and it gives special consideration to those over aged 50. Another scheme covering the whole region is The Women into Business Fund.

Street (UK)
Available in: West Midlands within 20 miles of Birmingham. Also do growth loan and equipment leasing.

Street North East
Avalable in: Tyne & Wear within a range of about 50 miles of Newcastle.

Test Valley Borough Council
Unusually for the UK Test Valley in West Hampshire (around Andover) offer a Business Incentive G R A N T. It’s only £500, but is available to small businesses in the Borough who are starting up or taking on an extra member of staff. For further details please contact the Council’s Economic Development Officer - Tel: 01264 368309 email: dgleave@testvalley.gov.uk

Wessex Re-investment Trust
Available in: Devon, Dorset and Somerset. “We are especially interested in lending to people in villages and small towns, but we can lend in cities as well.”