A Community Benefit Society (BenCom) is a legal corporate form that operates for the benefit of a wider community. It has a membership structure and adheres to the principle of ‘one member, one vote’. A BenCom is allowed to raise finance generally through the sale of community bonds or community shares and it can pay interest on the capital sums raised to reflect the cost of securing those funds.
SCF Ltd operates as a Community Development Finance Institution (CDFI). These exist to provide access to affordable finance to communities and individuals where there is a market failure or who are underserved for other reasons. CDFIs are not deposit-taking financial bodies and therefore need to raise their capital in other ways and from a variety of sources i.e. investors, grants, social lenders etc. CDFIs receive income from lending through interest and fees, portfolio management charges, with many securing revenue grants for the delivery of support services such as technical assistance and business support.
In 2017 CDFIs across the UK distributed £235m in loans to 61,163 customers. This included £142m to 363 social enterprises creating or supporting 4,661 jobs; £67m to 5,072 small businesses which resulted in the creation or saving of 8,053 jobs and £26m to 55,728 individuals.
There are currently six CDFIs in Scotland. All of them specialise in providing loans and financial expertise to one or more of the following underserved group – social and community enterprises; micro and small businesses in disadvantaged areas; self-employed and underemployed/unemployed or those on low fixed income. The two former groups are the ones that SCF Ltd is seeking to serve. SCF Ltd will not provide consumer credit.