Innovation Birmingham Campus-based ART Business Loans has joined forces with peer to business lender ThinCats, to pilot a unique scheme to raise £500,000 to support local businesses. The move is designed to improve access to finance for small to medium sized enterprises in the West Midlands, enabling them to create and preserve jobs.
ART lends £10,000 to £150,000 to businesses unable to access the finance they need from the banks. Working with local peer lending platform ThinCats, ART is trialling raising money to lend on to businesses. The usual model is that investors choose individual businesses in which to invest through ThinCats.
This initiative is part of ART’s continued planned expansion to meet demand from West Midlands businesses, following a third record year of loan delivery in 2015/16. “We have seen an increase in applications in the first quarter of this financial year, with loans delivered in excess of £900,000,” says Steve Walker, Chief Executive of ART Business Loans, “and we fully expect to see further increased demand in the months ahead.”
ART Business Loans, a social enterprise and member of Responsible Finance, has worked with other Responsible Finance members across the UK to develop the ThinCats Community Chest offer. Investors will have the opportunity to make a loan to ART for a five year term, which will benefit from Community Investment Tax Relief at a rate of 5% p.a. of the amount lent for five years. This is an attractive offer in today’s investment climate, providing both a financial return – 8.2% p.a. for a higher rate tax payer – and a social return – support for jobs in the local economy. All of the money raised will be lent to businesses in the West Midlands.
ART was launched in 1997 as a local mutual lender and was originally financed by social investors, including individuals and companies, who did not seek a financial return,. All original investments have been maintained and are still being used today.
Since it started ART has lent over £20m to more than 900 local businesses, which as a result have been able to create or preserve over 7,000 jobs. Average loan size in the last three years has been £35,000. “It is loans of this size, so important to smaller businesses, that are of least interest to the banks and many other providers,” explains Steve. “That is why it is vital that lenders like ART exist, with a remit to fill gaps in the business finance market.”
ThinCats Founder and Chairman Kevin Caley comments: “Community Chest is breaking new ground by providing a unique and tax-efficient way of investing in P2P, which I believe will be popular with investors, while delivering a vital new route to funding for social enterprise right across the UK.”
For further information about the ThinCats Community Chest opportunity, register with ThinCats at www.thincats.com.
For more information about ART see www.artbusinessloans.co.uk