Each quarter we gather information from across the community finance sector, creating a snapshot and sharing insights and trends with those that take part.
We also benchmark organisations with one another providing a useful look at how you may be performing in comparison to other community finance providers.
There’s more information about how you and your organisation can take part at the bottom of this article, but first let’s look at the headlines for Q1 2023.
20 community finance organisations took part in this quarters Community Finance Sector Reporting.
Loan books are continuing to grow Q1 2023
- The accumulated total of all gross loan books in Q1 is c£167m and total net loan book is c£143m – up 17% on this time last year
- The average gross loan book size across the 20 participating organisations is £8m – this has increased year on year.
- Accumulated gross and net loan books are up 4% compared to the last quarter
- Debt consolidation has increased for the fourth consecutive quarter as a reason for applying for a loan – this quarter there has been an increase in those applying for loans to cover unexpected bills and expenses
‘The most common trends for customer applying for loans are unexpected expenses, home repairs & improvement, car expenses & other one off purchases. The most recurrent reason at the moment is unexpected expenses which may be linked to increase in cost of living’
Average loan values have increased when compared to last quarter and this time last year
- This snapshot shows that the average new loan value was £1,088
- For credit unions with a gross loan book equal or below £5m the average was £1,359
- For credit unions with a gross loan book equal or above £5m the average was £1,119
- For CDFIs the average was much lower at £601
- The average loan value has increased 11% on last quarter and 13% compared to Q1 last year
- CDFIs average loan value has decreased slightly by £14 on last year
Community finance providers remain focused on successfully controlling their arrears
- Over 80% of respondents indicated their arrears remained steady or increased slightly
‘Gone up slightly, but we are within budget. We are being vigilant and carefully monitoring our arrears but we are managing well’
Lending volumes are up by nearly 50% when compared to this time last year
- Over 62,000 loans were issued by these 20 community finance providers, valuing a total of c£30m
- Combined lending volumes increased by 47% when compared to last year, and 80% against Q1 2021
- On average, participating organisations were issuing over 1000 loans a month in the last quarter
Lending is expected to increase in Q2
- The majority of organisations anticipate an increase in lending, however most expect this to be modest
- Affordability contuse to affect loan acceptance rates
‘Expected increase in lending in the next quarter, January and February are generally quieter months. In March we have seen an increase in lending and expect that to continue into Q2’
The majority of respondents expect arrears will remain stable or decrease next quarter
- 47% of respondents expect arrears to remain stable in the next quarter
- As with previous quarters, the cost of living crisis has been a key factor for organisations who expect to see their arrears increase
‘We are cautiously optimistic about arrears holding steady but are aware that the external environment makes that a challenge’
Continued support for customers in vulnerable financial circumstances
- 93% of new loans issued in the quarter were equal or below £1k and 83% had a repayment period of 52 weeks or less
- On average, 47% of new loans were issued to social housing tenants and 44% were to lone parents with dependent children
- The average loan value to lone parents with dependent children way £768 and for social housing renters it was £862
‘This company has been a lifeline for my family when I am currently off work due to ill health. Very fast and helpful communication. 5 stars all round’
Benchmarking within the community finance sector
We provide all organisations that take part in our insights survey a detailed report of our quarterly sector analysis and findings, along with an individual report benchmarking their organisation against the performance and position of other respondents.
This includes key performance metrics and can be a useful tool in your strategic planning allowing you to measure your performance and processes against others and identifying areas of best practice and improvement.
Our sector reporting also enables us to be as informed as we can be, supporting and informing our work and close relationships with trade bodies and other sector organisations – the more insights and information we share with each other, the more we can work towards successful outcomes for the sector.
If you would like to take part in future reporting, please contact the team at Programmes@fair4allfinance.org.uk