What is the Growth Fund?

The lack of affordable credit for the financially excluded (people on low incomes in deprived areas) has long been a source of concern for Government, and community-focussed organisations. Although DWP offers budgeting and crisis loans through the Social Fund, this lack of affordable credit often means that financially excluded people turn to high cost doorstep lenders and even illegal loan sharks which can result in spiralling debt problems.

The Chancellor’s Pre-Budget Report, published in December 2004 outlined measures to promote financial inclusion one of which was to set up a Growth Fund of £36 million to increase the availability of affordable personal loans via third sector (not-for-profit) lenders such as credit unions and community development finance institutions.

Following the March 2007 budget the Fund was increased by £6 million to £42 million and in December 2007 a further £38 million was allocated from the Financial Inclusion Fund for the period 2008 to 2011.

In the Budget 2009 the Chancellor announced an extra £18.75m for the Growth Fund, bringing the total to almost £100m.

Given its key role in the wider Financial Inclusion agenda and experience in dealing with third sector lenders, HM Treasury invited DWP to administer the Growth Fund.

Third sector lenders were invited to bid to deliver the Growth Fund (affordable lending) service within deprived areas throughout England, Scotland and Wales. The bids were evaluated during April and May 2006 and rollout of the service has now begun. You can see the organisations offering the affordable lending service, or find answers to frequently asked questions.