Alternative lender enters third decade with renewed funding pledge

An alternative lender in Birmingham is preparing to mark its 20th anniversary with a renewed commitment to supporting the growth of the area’s fledgling businesses.

ART Business Loans (ART), one of the UK’s first Community Development Finance Institutions, was set up to lend to businesses unable to access finance from the banks.

Fundamentally, this remains its ethos.

Steve Walker, chief executive of ART since its launch in 1997, said: “As a social enterprise, established as a mutual society, ART’s primary objective was, and remains, to support access to appropriate finance for business and the creation or preservation of local jobs for local people.”

The organisation was set up as a result of a report from a commission chaired by the late Sir Adrian Cadbury, who was to go on to become ART’s first chairman.

One of the major areas the commission looked at was access to finance for people and communities who were finding it increasingly difficult to engage with the banks.

“Strictly speaking we lend in addition to the banks – only if they can’t help and often lending alongside them as part of a package of finance.  However, we are now considered to be a part of the ‘alternative finance’ market, which has grown substantially over the past 20 years and includes peer to peer lenders and crowd funders,” added Mr Walker.

He said the banks were starting to move away from funding for small businesses, and micro businesses in particular, in 1997 when ART first opened its doors as Aston Reinvestment Trust.

However, the situation became critical following the credit crunch in 2008 when many funding streams dried up altogether.

“Banks are still the largest lender to small businesses by total value but they are no longer the first port of call for many small or start-up businesses.  The banks can’t make enough of a return at that end of the market, because the loans required are smaller and the risk is higher,” said Mr Walker.

“Our average loan size is £35,000 – a sum which it is particularly challenging to get elsewhere, even from the newer peer to peer lenders.”

Based at Innovation Birmingham Campus, ART now lends across the West Midlands, offering £10,000 to £150,000 to businesses unable to access any or all of the finance they need from the banks.

Since June 1997, the organisation has lent over £21m to more than 900 local businesses, which as a result have been able to create or preserve over 7,000 jobs.  Borrowers have come from diverse market sectors and used the loans for a variety of business purposes, including to support cashflow.

“We have grown significantly over the past three years as demand for loans has increased,” said Mr Walker.

“So whilst we reflect on what we have achieved over the past 20 years, we are also looking ahead, seeking additional funding and considering how we can continue to best serve the local economy in the years to come. We have money to lend now and urge businesses in need of a loan to get in touch.”

Pictured from left: Graham Donaldson, Martin Edmonds, Roz Haque, Andy King, Chris Allen-Lloyd, Barbara Seaton, Steve Walker.