Deep Purple Shoots, a community lending charity launched by the Karen Davies, is going really far. They are committed to empowering new business owners who have been rejected by mainstream financial institutions. Purple Shoots was set up to provide credit to people who would otherwise be ignored by high street banks. In the past 12 years, it has created close to 1,000 new businesses through very small loans of up to £5,000.
Purple Shoots is passionate about bringing everyone into the fold of financial opportunity. They’re committed to getting to know the person behind every loan application — stepping outside of traditional credit scoring. Banks, she stressed, are “missing out on a big talent pool” by only focusing on the quantitative scorecards. The charity’s approach, which looks at the character of the person and the feasibility of their business plan, has been a part of the charity’s lending decisions.
In the 2022-23 fiscal year, Purple Shoots made 69 loans. In doing so, this program created 104 new jobs, concentrating on opportunities in underserved communities. Between inflation, rising interest rates, and increasingly high costs for goods and services, borrowers have never been more financially strapped. Over 60% of Purple Shoots’ clients fall behind on their loan repayments eventually. The nonprofit’s dedication to serving these borrowers runs deep, for it values their long-term progress beyond strict repayment schedules.
Tiffany Bramley took out a £3,000 loan from Purple Shoots to help get her Tiff’s Cleaning Angels business back off the ground in Cardiff. She brought her experience to bear on traditional lending practices to share what she learnt. After being rejected by her high street bank—though they expressed great concern—Bramley was referred to Purple Shoots.
Reflecting on her journey, she stated, “She was the one who gave me that hope and believed in me.” Since then, Bramley has successfully repaid her loan and shone a light on the need for a more personal approach to lending. She noted, “They tend to just label people and that needs to change.”
Karen Davies articulated the charity’s philosophy: “We’re looking at the person and what they’re like. We’re looking at the business plan and whether it’s going to be viable.” She acknowledged that many borrowers may encounter setbacks, saying, “So if something goes wrong it will impact their ability to repay.” As she reminded lamenters, “It’s a huge failure that’s anticipated, but the real failures are much, much lower.”
Purple Shoots’ default rate on loans is around 20%. That’s an indication that the majority of borrowers are doing well by their financial obligations, despite getting off on the wrong foot. This further highlights the proven impact of Purple Shoots’ supportive lending model.
Sam Rex-Edwards from the Finance Innovation Lab told mainstream lenders to wake up and change how they do things. He said that “too many people are being forced to spend a poverty premium by using expensive forms of credit…such as payday loans.” He expressed his concerns over the policy headwinds confronting America’s small and medium-sized firms. Too frequently, they’re unable to do so, as they’re refused credit by High Street banks.
