GUEST COLUMN:
Emma Musgrave
Operations Director
Purple Shoots
When people are excluded from finance, the economic consequences extend far beyond the individual. Female founders, ethnic minority-led businesses and those who have faced difficult personal circumstances are often cut off from mainstream routes to funding. The result is that viable ideas are left on the shelf and the economy loses out on the value those businesses could create.
Research shows that discouraged borrowers are not necessarily poor prospects. In fact, studies have found that a very high proportion of those who decide not to apply for finance are actually credit-worthy. Yet the perception that “people like me” will not be supported continues to deter applications, particularly among women. This is wasted potential on a large scale.
The experience we have at Purple Shoots underlines this point. Almost everyone who comes to us has either been turned down for a loan, told not to apply, or assumed rejection was inevitable. Many are on benefits and therefore have poor credit ratings, while others are carers, people with disabilities, or new arrivals to the UK without a long-term financial record. Despite this, when they are given the chance to access small amounts of ethical finance, they repay, they grow, and they contribute.
The amounts involved are modest. Our average loan is under £5,000, yet the return is remarkable. For every pound we lend, the Government saves £4.20 in benefits not spent, and the local economy gains £14.25. In other words, every pound generates £18.45 of value. These are businesses that would not have existed without that small initial investment. The evidence shows that exclusion from finance is not only a social problem but an economic missed opportunity.
We also see the importance of belief. Too many people approach us convinced they will be told no again. When they are listened to, encouraged, and given the chance to test their ideas, the results can be transformative. That change in confidence is not captured in spreadsheets, but it underpins the long-term sustainability of the businesses they go on to create.
Of course, this is specialist work. It requires time, effort and understanding. Not every lender is equipped to engage with people who have faced bankruptcy, caring responsibilities, or other barriers. It would be unrealistic to expect mainstream banks to take on this role. But there is now a body of evidence showing that where organisations like ours step in, the impact is measurable and significant.
This is why I believe the real opportunity lies in partnership. Mainstream lenders already play a vital role for those who meet their risk criteria. For those who do not, the answer is not to ignore them, but to channel support through proven specialist models. With additional funding, the number of businesses we and others could help to start would rise sharply, bringing new income and jobs into communities where opportunities are limited.
Inclusive finance should therefore be seen not just as an ethical responsibility but as an economic strategy. When people who have been written off are supported to create businesses, they become taxpayers, employers and contributors to local economies. The return is clear, and it is far greater than the initial outlay. At a time when growth is a national priority, it makes little sense to leave so much potential untapped.
Emma talks about this and more in the Finance & Investment Wales podcast episode The Finance Gap: Who's Being Left Behind? Listen to the podcast here.
