Where appropriate, small sums of affordable credit provided by responsible lenders can change lives, build financial resilience and drive economic growth.

There are more than 20m people in the UK living in financially vulnerable circumstances, with many finding themselves excluded from mainstream financial services and struggling to access essential safety nets like insurance, savings and credit.

At the same time there’s an estimated £2bn unmet gap in the provision of credit which could be met by the commercial sector – a gap which is set to grow significantly without meaningful action.

And while credit isn’t the answer for everyone, we know that a small sum of money, lent responsibly, can help people manage life events, cover unexpected expenses and build their long term financial resilience.

We recently invited eight people to share their experiences of being able to access small sums of responsible, affordable credit from a range of lenders, including community finance organisations and non-bank commercial lenders.

Their stories are a powerful reminder that access to credit isn’t just about money – it’s about financial resilience, personal dignity, and having access to a safety net to smooth over life events when they happen.

For many people, access to affordable credit means keeping the car on the road, furnishing a new home, or weathering any number of life events. Unfortunately, the current supply of affordable credit for people in financially vulnerable circumstances doesn’t meet the demand.

What does this mean?

At the moment, many of the 20m people living in financially vulnerable circumstances won’t be able to access an affordable product, and that can have real implications.

Our research tells us that when people are declined by mainstream lenders, there’s a chance that they may turn to an unlicensed or illegal lender. In fact, in a recent survey commissioned by Fair4All Finance and conducted by Ipsos UK, up to 4% of the population of Great Britain were estimated to have used an unlicensed lender or loan shark in the past 12 months, with over half saying they did so because they were declined for at least one other form of credit.

As well as transforming the financial lives of individuals, scaling access to affordable credit will also drive inclusive economic growth. Modelling by WPI Economics reveals how an additional £5.9bn could be added to the UK economy each year by improving access to affordable credit and suitable savings schemes.

Research shows that reducing financial stress increases a worker’s capacity and productivity, reducing absenteeism and increasing economic output.

Our research into the social impact of credit unions in Merseyside (with Central Liverpool, Enterprise, Liverpool Community, Lodge Lane and District, and Riverside credit unions) showed the increased availability of affordable credit led to over two thirds of respondents claiming a significant positive impact on their financial situation and over 80% reporting a positive effect on mental and physical health, and in turn their economic productivity.

Our work so far

At Fair4All Finance, we are committed to expanding the provision of affordable credit through targeted investment, practical support and partnership across the financial system.

Through our Affordable Credit Scale Up Programme we have already committed over £40m in social investments, grants and guarantees to community finance providers such as CDFIs and credit unions.

These social investments have funded technology transformations, enabled streamlining of processes and integration of customer support tools, steps that have helped providers grow sustainably and serve more people in vulnerable circumstances.

In 2025 alone, investees delivered 238,000 loans totalling £161m in new affordable credit, demonstrating strong demand.

You can read more about our Scale up Programme in this blog.

What else needs to happen

Despite this encouraging growth the current speed of growth of affordable credit isn’t close to meeting the challenge facing millions of people across the country. Simply put, we need to try a new approach.

Encouraging greater investment into the sector is also central to our mission. We explored this in detail in our blog Encouraging and Enabling Investment in Affordable Credit. Scaling small sum lending requires both lending capital and potentially modest subsidy to contribute to additional operational costs of serving financially vulnerable customers.

The opportunity for impact focused investors is significant: small loans, when delivered responsibly, can help millions of people avoid high cost or illegal borrowing, while enabling lenders to provide wraparound support that strengthens long term financial resilience. 

Collaboration across the financial sector is important. Our pilot with Lloyds Banking Group and NestEgg demonstrates the potential for how referrals from mainstream lenders to community finance providers can help make sure that customers who are declined for credit still have access to safe alternatives. This joined up approach helps prevent people from turning to unaffordable options while ensuring community lenders can reach customers who are a good fit for their products. 

We are also using lending guarantees and first loss funding to unlock additional responsible lending. As highlighted in our blog A little (first loss) goes a long way. Targeted loss mitigation mechanisms help community finance organisations lend confidently to customers who may have thin credit files or nontraditional income patterns, without compromising on affordability assessments or risk controls.

This approach reduces operational barriers while encouraging wider participation from mainstream partners, addressing that £2bn annual unmet demand for credit that could be served on commercial terms.

By continuing to invest strategically, partner widely and champion systemic change within the financial services sector, we are working to build a financial system that supports those who need it most.

We look forward to continuing to collaborate with stakeholders from across the sector, including government, regulators, investors and industry partners to build on this momentum and close the credit gap for good.