Community lenders have generated over £100m in ‘extra economic value' through a government-backed fund supporting small businesses and social enterprises in England.

Figures from the Community Development Finance Association (CDFA) have revealed that loans made by its members have delivered economic value worth more than five times the original funding [1]. The funding has already secured over 2,600 jobs for English towns and cities, creating substantial benefits for the government and local economies.

The loans were made possible through the £60m Regional Growth Fund (RGF) - £30m of which is funded by the government, alongside £15m each from Unity Trust Bank and the Co-operative Bank.

With £21.6m lent so far, the RGF funding is punching above its weight in impact to small and micro businesses and social enterprises.

The funding has so far created 641 jobs and secured 2,788, benefitting 849 businesses. It is expected to secure a total of 8,000 jobs over six years - which will create an estimated economic boost of over £320m.

Small businesses in the UK create 60% of jobs and 50% of GDP [2], but micro enterprise and SME loan application rejection rates from mainstream banks have soared from around 5% in 2004 to upwards of 20% in 2012 [3], as many small and micro businesses struggle to access funding from high street banks.

Ben Hughes, Chief Executive of the CDFA, said: "Community Development Finance Institution (CDFI) lenders are stepping up to fill the gap in available finance and the potential for further growth is immense. We are calling on the government to reinvigorate its commitment to economic growth in communities across England with a further £150m of funding. The value added demonstrates that providing loans through the alternative finance sector is the best way to turn government funding into long-term sustainable finance for local communities and businesses.

"A new annual £150m fund is vital to expand, replicate and sustain community finance and more importantly for the development of sustainable local enterprises and local jobs. This could unlock significant private sector investment of up to £600m."

Peter Kelly, Business Development and Marketing Director at Unity Trust Bank, said: "Unity is proud to be the leading provider of commercial funding to the CDFI sector. The social economy is a powerful engine for growth and is driving positive social change through enterprise and job creation. Important programmes such as the RGF have enabled CDFIs to provide improved access to affordable finance and Unity is delighted to be playing its part in this success story."

Paul Martin, National Manager of Charities and Social Enterprise Banking at The Co-operative Bank, said: "As a Bank with values and ethics at the heart of our business, we fully understand the important role small businesses and community based organisations play in ensuring our communities survive and thrive. We are pleased that through our continued involvement in the Regional Growth Fund, we can further extend our support to these dynamic sectors through wholesale lending to enterprise CDFIs."

Almost half of loans made, by value, are in the West Midlands region, 16% are in the North West, with the remainder disbursed throughout the rest of England.

Businesses can find out more from www.findingfinance.org.uk.