Credit provider Fair for You offers more loans as it challenges high cost lenders

The not-for-profit social enterprise allows customers, unable to access mainstream credit, to buy essential household items from shops including Whirlpool, Dunelm, Argos and Carpetright. Independent research shows that the majority of Fair for You customers are able to stop using high-cost providers as a result. The investment includes £5m in dormant assets funding from the Government-backed Fair4All Finance.

Seven social investors have joined forces to create a perpetual bond which secures FfY’s balance sheet and allows it to leverage commercial funding to take on the high cost credit sector.

Alongside Fair4All, the investment comes from six existing investors: The Joseph Rowntree Foundation, Tudor Trust, the Esmee Fairbairn Foundation, Barrow Cadbury Trust, Robertson Trust and Ignite.

This is the first time a perpetual bond has been used to fund affordable credit – with £4.35m upfront rising to £7½m when fully drawn down.

This investment round will allow the social enterprise to lend to many more families in need, rising from 25,000 loans last year to 250,000 loans annually in 2025.

This will deliver at least £58m in cost savings to customers each year through avoidance of high-cost short term credit.

Following the completion of the perpetual bond’s first phase, FfY has appointed Sarah Gardiner, the former head of investor relations at Nationwide, to head up commercial fundraising.

She said: “By lending responsibly and sustainably to tens of thousands of lower income households, Fair for You has demonstrated the huge opportunity to fill this much needed gap in the market. We are growing and diversifying our investor base to further boost our rapid growth and broaden the proposition.”

Howard Bell, Fair for You’s chairman, added: “There are around 15 million people in the UK struggling to access affordable credit who are just one unexpected bill or bit of bad luck away from a crisis.

“Lockdown has made it harder for families to live without basic items such as cookers and washing machines. The need for Fair for You to scale rapidly has never been clearer. We are delighted to be the first genuine not-for-profit to use the dormant assets funding and ongoing support from social investors to leverage commercial funding and push out firms that take advantage of financially vulnerable customers.”

During lockdown, the ethical lender has made around twice as many loans as it did in the same period last year reflecting the increased social need and the collapse of high-cost rent-to-own retailer BrightHouse.

Loans for washing machines have doubled, with applications reflecting the closure of launderettes.

One customer, describing the life-changing impact of having one, said: “I don’t have to wash clothes in the sink by hand anymore. It’s just a washer-dryer to most but to me, it’s a miracle.”

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