What is ART?

ART is a CDFI (Community Development Financial Institution), based in Birmingham and established in 1997. It was the first of its kind in the UK and its model has been replicated in many other regions. ART shares its experiences with others in the sector, both in the UK and around the world, and contributes to local and national UK government policy on access to finance for enterprise.

The Need

ART is needed to fill gaps in the conventional finance market. It fills a niche between bank lending, grant funding and charitable donations. Its remit is to help create local jobs for local people.

Loans

ART lends between £10,000 and £50,000 to businesses and social enterprises in Birmingham and Solihull, which need funds to survive or grow, but have been unable to secure them from conventional sources. The loan could be for cash flow or to support a capital investment project. It could be part of a finance package with other financiers, or stand alone. Repayment terms vary from 6 months to 5 years.

Borrowers

ART's portfolio of borrowers include limited companies, partnerships, sole traders and registered charities. It has supported both innovative start-ups and established enterprises in a range of sectors, including, manufacturing, service sector, the care industry and education.

Investors

Private individuals and companies can invest between £250 and £20,000 in ART. Their return is social rather than financial. As ART is accredited by BIS , investments may qualify for Community Investment Tax Relief (CITR), which offers 5% per annum of the amount invested off personal or corporation tax liabilities for a maximum of five years. This is equivalent to a 6.3% return over five years, which compares favourably with many savings accounts.

Individual and corporate investments provide a base from which ART is able to attract additional funds from a variety of public and private sector sources.

All money invested in ART is used to provide loans. As these are repaid the money is reinvested in more loans.

For more information on becoming an investor please click here

History

The need for ART was first identified by the Aston Commission, a community initiative involving local groups, voluntary sector organisations and business, which identified the problems faced by Aston Ward in inner city Birmingham.  A key recommendation was the establishment of a community based finance institution.  An intial feasibility study was carried out in 1989 and a business plan developed in 1992.

This was followed by a lengthy design and development stage during which inspiration was drawn from the successful Community Development Loan Fund movement in the USA.

A donation of £40,000 from the Barrow Cadbury Fund created a guarantee fund to underwrite loans and ART was launched in 1997.  Its loan fund was built initially by socially directed individuals and during its first year, ART raised £300,000 in this way.

Banks, housing associations and businesses followed, all with the desire to promote social and economic outcomes from their investments.  Operational help came with revenue support from Barclays and NatWest, including staff secondments through Business in the Community.

After earlier support during the development and feasibility stages, ART gained momentum with more support from Birmingham City Council, local area regeneration initiatives and the Energy Saving Trust.

ART is an independent organisation and a social enterprise, being constituted as a mutual society, that aims to be sustainable in the long term.  The balance sheet from its latest Annual Report shows that it is in a healthy position financially, despite being designed to take greater risks with its lending, and therefore incurring greater write-offs, than the banks.

Key Achievements

From June 1997 to December 2009 ART has

• Made over 450 loans
• Lent over £8.0m
• Helped member borrowers create or safeguard over 3000 jobs

Social Enterprise Loan

In 1999, ART accessed European funding for a Key Loan Fund dedicated to supporting social enterprises in deprived areas that had been unable to obtain finance from commercial sources.  An in-depth, independent evaluation at the end of this project recognised significant achievement by ART in shaping the futures of progressive social enterprises by delivering responsible loans at affordable cost.

Contributions to Policy Research

Steve Walker, Chief Executive of ART since its inception, served a six year term as a member of the National Small Business Investment Task Force, which advises the Small Business Service and the Government on access to finance issues for enterprise.  He is also currently a member of the Regional Finance Forum of Advantage West Midlands.

ART has contributed to, and featured in, policy research, including:

• The Financing of Social Enterprise – Bank of England – May 2003
• Enterprising Communities: Wealth Beyond Welfare – a report from the Social Investment Task Force – October 2002
• Finance for Small Firms – Bank of England – April 2002
• Enterprising Communities: A tax incentive for community investment – a consultation document – HM Treasury – March 2001