Since 1997, ART has loaned nearly £30 million, helping to create and support 8,000 jobs. It now urgently needs to raise more funds or in two to three years its ability to lend will be substantially reduced, the lender says.
ART Business Loans, founded twenty-two years ago to support local jobs in areas underserved by mainstream finance, began life as the result of a report by the Aston Commission, a task force chaired by the late Sir Adrian Cadbury.
The Commission was set up to investigate ways of improving financial inclusion and access to business finance in Aston, its aim to try and break the cycle of financial exclusion and the indifference of the high street banks which together had helped fuel generations of unemployment in the area.
Sir Adrian Cadbury became the chair of ART’s first board and Steve Walker joined in 1996 as a secondee from Barclays Bank, where he had been Senior Corporate Manager based in Leamington. Steve became chief executive at launch in 1997 and has led ART ever since.
But this brave new world of community finance was not immediately auspicious, Steve recalls. ‘At first there were just the two of us – me on secondment and a student who today we would call an intern. We operated from kindly donated but rather ramshackle office space and in the first year we lent less than £200,000. Today, we are still based in Aston but we have six staff with a voluntary board of directors in modern offices in Innovation Birmingham Campus. We are still targeting underserved areas and communities – this remains our social mission – but we now lend £3 million a year across the whole of the West Midlands, with loans ranging from £10,000 to £150,000.’
But after helping over 1,400 West Midlands businesses grow and create jobs for over two decades, ART itself now stands at a crossroads.
‘The fact is,’ says Steve Walker, ‘we are a victim of our own success. Three-and-a-half years of Brexit uncertainty and public sector austerity haven’t helped either, of course. Demand is as big as it has ever been and we want to be able to lend more. But the harsh truth of the matter is, we have got to look at new ways of raising money for lending on to small businesses and social enterprises.’
Last year ART raised £250,000 from a pioneering community share offer using the Ethex social investment platform. This initial share offer was supported by several high-profile regional business leaders, including Greater Birmingham Chambers of Commerce boss Paul Faulkner, a former Chief Executive at Aston Villa and Nottingham Forest. A second share offer, providing impressive financial returns of up to 9.1 per cent per annum for five years, is open until March 24th 2020.
Since 1997, ART has loaned nearly £30 million, helping to create and support 8,000 jobs and demand for finance at the levels offered by ART continues to grow. ‘But despite the plethora of alternative finance providers who have emerged following the banking crisis,’ Steve Walker explains, ‘the appetite of the mainstream banks to lend to small businesses hasn’t grown – in fact, for reasons the banks regard as soundly commercial, it has reduced. This is why the role of a lender like ART — which is itself a social enterprise and lends in order to achieve a social purpose — remains crucial. We’re doing what mainstream lenders won’t.’
‘It is ironic,’ says Steve Walker, ‘that more than two decades after we began life we now have politicians in the West Midlands – in the shape of the metro Mayor and the West Midlands Combined Authority – who see the critical importance of what is being termed “inclusive economic growth”. They understand that “business as usual” will only increase inequalities and perpetuate financial exclusion. This is what dear Sir Adrian Cadbury was talking about thirty years ago. And yet the mainstream banks still don’t get this. They don’t see any longer-term social good – they just see lending decisions that wouldn’t be good for their profits or their shareholders.’
ART has been supported over the years by a variety of financial backers, including national and local government, businesses looking to exercise Corporate Social Responsibility, personal investors interested in both a social and financial return, and in recent years substantially by its own bankers Unity Trust Bank.
Interested in investing?
If you are interested in investing in ART and helping it do more to support the West Midlands economy you can read its full share offer document and register to buy shares HERE.
The financial return on the investment is in the form of a tax relief called Community Investment Tax Relief. This provides a deduction from tax paid each year for five years off an individual’s or company’s tax bill of five per cent, which can equate to up to 9.1 per cent for the highest taxpayer. At the end of the period the capital is returned to the investor or can be reinvested for a further five years.