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February 21, 2018

Invest in what matters

One of the few success stories coming out of the world of banking is the rising popularity of ethical banks – banks that only invest in ethical causes and even offer the customer a choice over which type of ethical business their money is invested in. Having a much closer relationship with where your money is being invested seems to have real appeal and this is the central premise underpinning a simple but radical investment proposition – the community bond. For the first time local people can literally invest in the economic future of their community.

Pauline Hinchion, Scottish Communities Finance Ltd (SCF)

Community Bonds: Allowing ordinary people to invest in the economic future of their communities.

The political noise about the closures of banks, often the only ones left in communities, has been getting louder recently.  But the reality is that the systematic closing of banks has been a feature of our lives for at least ten years. So, there is some research around that has looked at the effects of bank closures upon communities.  Although the media has tended to focus on the impact on local people who can no longer get local access to their cash, the impact for local businesses and the local economy is also stark.

According to research by ‘Move Your Money’, communities without a bank lose 104% of lending growth, meaning that the major banks are withdrawing money from those areas, rather than lending and helping them to be sustainable. On average, communities that lose their last bank suffer a drop in lending of around £1.6 million, a significant and damaging economic loss to any community.

Even in communities where a bank still exists, the reality for most micro and small business is extreme difficulty in accessing affordable finance, particularly in the ten years since the financial crash. According to ‘Small Business’ the last five years has seen a drop of 37 % in the value of overdrafts provided to SMEs.  It states that ‘without access to overdrafts, SMEs have less capital with which to expand current operations, invest in new assets or trade through tough times’

The result of this loss of lending can often be business failure; job losses; lack of job opportunities and a decrease in the availability of local products and services making our communities less attractive places to live and work. 

However, people do not have to passively accept this scenario and local people can play a role in lessening the impact of bank closures, by becoming investors in their own communities.  Community Bonds allow local people to invest in their community.  The money raised from the bonds can be used to set up a community loan fund that can lend money to local organisations and businesses thereby assisting them to continue to grow and trade.

The aim of SCT Ltd is to assist Scotland’s place-based communities and thematic communities to become more viable and more vibrant. Encouraging ordinary people to reinvest back into their communities – by pooling their financial resources into a community loan fund and lending this out to local, social and community enterprises – helping them to become more sustainable.

SCF Ltd, a community benefit society registered with the FCA, works with communities to issue Community Bonds that can be purchased by individuals and organisations. The money raised will then be used to establish bespoke Community Loan Funds, tailored to suit the needs of that community.

Purchasing Community Bonds is about making an investment in your local community. Becoming a Community Investor shows your support for your community and encourages regeneration, local job creation, vibrant local facilities and a diverse economy.

SCF Ltd is looking for other communities that might be interested in establishing a Community Loan Fund.

For more details, contact SCF on 07934 690429 or email See