Jack Dorsey’s Block puts £2m into Birmingham community lender breaking ‘new ground’ for industry
A not-for-profit community lender in Birmingham has received £4m in funding, including £2m from ex-Twitter CEO Jack Dorsey’s company, in a sign the local finance sector is set to enter a new phase.
Block Inc, a mobile payments firm set up by Dorsey in 2009, is providing £2m to ART Business Loans, representing its first social impact investment in the UK. This is being matched by Unity Trust Bank.
ART is a Birmingham-based Community Development Finance Institution (CDFI), founded in 1997 to alleviate poverty through enterprise. It lends between £10,000 and £150,000 to businesses in underserved and disadvantaged communities, most of which are unable to receive funding from traditional banks.
Steve Walker, CEO at ART said: “This deal is a real game-changer for us and a great vote of confidence from such well-established institutions as Block and Unity Trust Bank.
“This £4m agreement puts ART on a firm financial footing at a time of considerable economic uncertainty and enables us to continue to provide key financial support to SMEs across the West Midlands, many of whom are currently facing considerable financial headwinds.”
Amrita Ahuja, CFO at Block, said: “We are thrilled to be making our first UK social impact investment. ART’s efforts to help underserved groups access fair and responsible finance is completely aligned with Block’s mission of economic empowerment.”
CDFIs are non-profit lenders based in local communities that provide debt finance and support to borrowers who have often been rejected by traditional lenders.
In 2021, CDFIs lent more than £228m in UK communities, a 32 per cent increase on the year before. There are around 67 CDFIs in the UK.
Industry figures said that today’s investment marks a significant moment for the sector as it seeks to become more widespread.
Theodora Hadjimichael, CEO of Responsible Finance, said: “Block’s investment breaks new ground for the entire CDFI sector.”
“It is routine for large corporations in the US to invest in CDFIs, knowing they boost business growth, help create jobs and address regional and demographic under-representation in accessing finance. But an investment like Block’s has been unprecedented until now in the UK, despite our sector’s unique and well-evidenced track record over more than a quarter of a century.”
Hadjimichael noted nine out of ten of the viable businesses which borrow from a CDFI have been turned down for financing elsewhere.
The news comes a couple of months after Natwest backed £900,000 for CDFIs as part of its wider cost of living support package.