Guarantee-backed impact investment is ‘blueprint’ to boost fair finance

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Salad Money funding agreement with Ceniarth

Salad Money has closed an impact investment of £1.2m with Ceniarth, a family office which funds market-based solutions to benefit underserved communities, part-guaranteed by not-for-profit financial inclusion organisation Fair4All Finance.

As a social enterprise and community development finance institution (CDFI), Salad serves full-time key workers excluded from mainstream credit because they have a low credit score or lack a credit file completely. Many work in the public sector, need to borrow and want to avoid high-cost and illegal loans. Each of our loans saves a typical customer approximately £500 in interest compared with the alternatives available to them. 

We will use the Ceniarth loan – initially £1.2m over two years but with the potential to be extended to £2m over five years – to meet rocketing demand. The deal is set to be a “blueprint” for enabling more impact investors to back UK CDFIs, after campaigners, journalists and politicians across parties called for more investment into these “social purpose” lenders.

More than a quarter of UK adults would struggle to pay an emergency bill and millions are borrowing from illegal moneylenders or loan sharks. CDFIs including Salad Money are purpose-driven lenders which offer a cheaper option to people excluded from mainstream finance.

Salad uses Open Banking and machine learning to assess affordability, so applicants aren't penalised or unfairly excluded for having an impaired credit score. Many of our customers would automatically be turned down by traditional lenders which use credit scores, leaving them with limited options when they need credit, which 8 out of 10 in the UK do from time to time.

Guarantor Fair4All Finance, the not-for-profit financial inclusion organisation, is already a social investor in Salad Money, having made a £5m investment in 2021 and a further £2m investment in 2022 through its Affordable Credit Scale Up Programme, designed to increase the supply of fair and affordable credit for people in financially vulnerable circumstances.

Diane Isenberg, Ceniarth’s Founder and Managing Director, said:

"As a major lender to the mature, US CDFI sector, we have been closely watching developments in the more nascent UK CDFI landscape and looking for ways to support growth.  With millions of people locked out from access to fair credit even if they can afford to repay it, the CDFI sector is key to building a more inclusive consumer credit market.  Salad Money is providing a vital service to public sector workers and others who would otherwise be subject to highly predatory lenders.    Salad’s support in educating consumers about their options is also critical.  We are appreciative of the role that Fair4All Finance is playing in extending a guarantee for our loan.  I hope this deal inspires more impact-focused investors to back the UK’s social purpose lenders."

Phillip Hyett, CFO at Salad Money, said:

“We are thrilled to close this innovative transaction which will directly help several thousand financially vulnerable customers. Ceniarth is an excellent long-term partner for Salad with impressive pedigree in impact investment and Fair4All Finance have demonstrated great imagination and determination to help facilitate the deal. We hope the investment structure will serve as a blueprint to galvanise more funding into the affordable finance space. It has been a pleasure working with both parties.”

Holly Piper, Investment Director at Fair4All Finance, said:

“We’re delighted to be able to play a part in this catalytic investment, which will ensure thousands more people are able to access fair and affordable credit from Salad Money. We know the impact a small, affordable short term loan can have on people in financially vulnerable circumstances, helping smooth incomes, meet unexpected costs and build financial resilience. We’d love to see more investors follow Ceniarth’s lead and further unlock the potential of the UK’s community finance sector.”

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