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Commercial banks must open up lending to small businesses to boost investment in community energy projects, according to a report published today.
Think tank ResPublica’s report says existing major banks are failing to lend to community energy businesses, which are crucial in achieving a diverse, sustainable and innovative market.
Alongside a call for commercial banks to open up lending to small businesses, the think tank has urged the Treasury and the financial services regulator to offer further support to online ‘crowdfunding’ platforms, which offer “an immediate opportunity to plug the investment gap”.
Crowdfunding allows members of the public to contribute small donations through an online platform, often resulting in the accumulation of large sums of money.
ResPublica said £5.2 million has been invested through the Abundance Generation crowdfunding project alone, with seven of its renewables projects attracting an average investment of £1500 through individual investments as small as £5.
The publication also calls for the introduction of greater incentives to encourage more people to invest. Recently introduced tax reliefs, such as the Social Investment Tax Relief (SITR), should be opened up to a wider range of small businesses with a strong social purpose, it claims.
In addition, the publication calls for the extension of tax-free saving via ISAs to include debt-based securities, which are offered by many peer-to-peer lenders and via crowdfunding, and which is currently excluded from this scope.
Energy minister Greg Barker, said: “Expanding lending and investment for our small businesses is vital to achieving the competitive, diverse energy market that this country needs. Community energy in particular is central to my ambition to move from the Big 6 to the Big 60,000, and must be supported.
“We need more community-generated power in the UK’s energy market and to enable a wide range of investors – from commercial banks to individuals – to take advantage of this opportunity.”
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