Politicians and business leaders gathered in the Senedd in Cardiff last week, to learn about the vital work of a microfinance charity which is transforming lives in deprived areas of Wales.

The charity, which is now more than five years old, was showcasing its work to Assembly Members in the event entitled Does Poverty Mean Exclusion?

Ethical lender Purple Shoots, which is based in Pontypridd, helps people on benefits or a low income to start their own businesses, lending to people who are excluded by the traditional lenders such as banks.

Since it was established, it has lent more than £1.2 million to help people across Wales create their own businesses and transform their communities.

Founder Karen Davies told the event that too many entrepreneurial people were trapped by a benefits system which drains them of all funds before they can claim benefit, including any funds to be used by a new business.

And, she said, many people from deprived areas had found a “Got nothing? Get nothing…” attitude from traditional sources of business funding.

There is still a stigma attached to people claiming benefits despite the fact that research by the Joseph Rowntree Foundation had blown apart stereotypes, such as the one where benefit claimants have lots of children.

“In fact, the study found that just 8% of benefit claimants have more than two children,” she said.

Instead of looking at stereotypes, Purple Shoots understands that people within communities know better than anyone else what’s needed to transform their economies.

“We listen to them,” Karen said.

“Instead of the stereotypes, we have found resilient people who understand what’s needed in their areas.”

Jane Hutt, the Deputy Minister and Chief Whip, said:

“The system doesn’t work for people and it doesn’t work for our deprived communities.”

She praised the work of Purple Shoots and pledged to look at how the Assembly could give the charity the support to which it is entitled and deserves.

Thanks to the fact small business people spend within their communities and create jobs, Purple Shoots estimates the impact of their lending has seen a benefit of around £12 million to the Welsh economy over the past five and a half years.

The businesses it has helped create are hugely varied. They include a café, a cake making business, a dog grooming parlour, a business making preserves, a kayak angling business, a business which helps train families whose loved ones have dementia, a stonemason, a craft pottery, a bespoke embroiderer, and a jeweller.

The loans are small, the average size is £2,700, and 70% of all loans are given in the bottom 50% of deprived areas in Wales. 96% of borrowers were on benefits when they were given a loan and around 400 people have been able to get off benefits as a result of getting funding for their business from Purple Shoots.

More than 370 new businesses have been started with the help of the funding and more than 460 loans have been given to would-be business people since 2013.

Purple Shoots also helps like-minded people to set up self-reliant groups in their area, looking at ways of creating income for their members and, often, leading to the establishment of community businesses.

The charity’s success has sparked interest in Scotland where it is in talks about how to create a similar initiative there, and Purple Shoots has also established self-reliant groups in the west of England.

Purple Shoots is funded by donations and it is looking for more corporate donors looking to fulfill their commitment to their corporate social responsibility and sponsors to help it expand its work and help more people to get out of poverty.

Its Purple Spoon Club encourages people to give regular donations to the charity. Find out more here.