Community groups missing vital funding after banks shut the door on new accounts

Posted On 18 Nov 2020 at 12:54 pm

Community groups set-up during the pandemic are struggling to access funds after banks stopped accepting new business customers.

The Bedford Square Garden Project was set up last year but interest in the group boomed during the corona crisis and, earlier this summer, organisers realised they would need a bank account.

But it was too late, as many banks had already shut the door to new customers due to a surge in applications caused by interest in the government’s Bounce Back Loan Scheme.

Pete Ranson, Acting Chair of Bedford Square Garden Project, said: “Everything we have been working towards is now in limbo. It is being hampered because we can’t get money because we don’t have anywhere to hold it.”

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Pete Ranson, Acting Chair of Bedford Square Garden Group.                                                                                                       Photo courtesy of Coral Evans.

The Project is run as an unincorporated association and, in order to operate, needs a Business Account. 

Mr Ranson attempted to open an account with Metro Bank, where he is already a customer. But, by the time the group had gathered the information needed to fulfil the bank’s criteria, Metro Bank had also closed its doors to new applications.

Banks are refusing to take on new business customers due to a huge rise in businesses trying to access the government’s Bounce Back Loan Scheme, announced earlier this year and extended until January 2021.

In order to access the loans, small and medium sized enterprises (SME) are required to hold a business account with one of the eight banks designated by the government to oversee distribution of the money.

It has affected 250,000 businesses nationally and, consequently, the delays have had an impact on new organisations needing an account.

Currently, Lloyds, Metro Banks, Santander and HSBC are closed to new applications and RBS and Natwest are only dealing with applications from existing customers. Barclays is the only high street bank taking on new applications but are warning that there are long delays.

Mr Ranson said: “We can have donations of physical items, such as spades, but not in terms of cash. People can pledge but not donate. 

“It’s infuriating because we know the is funding out there. We could apply for it and get it but we’d have nowhere to put it.”

The group was hoping to secure money from sources including the Councillor’s Fund, which had been earmarked for the renovation for the square’s wooden benches, and Rampion Wind Farm.

Photo courtesy of Bedford Square Garden Group Facebook Page.

Dani Ahrens works for The Resource Centre, an organisation supporting community groups in Brighton and Hove.

They provide practical services like information, training and (in non-pandemic times) equipment.

Ms Ahrens said every new community group has encountered the same problem.

“The banks closed their doors in the first lockdown.

“This has affected anyone starting a new project, the knock-on effect is that it makes it difficult to get funding. At this time, community groups are expected to work and provide services. This is really causing problems for people.”

She added that the only solution is for groups to ‘piggy back’ other organisations, which have a bank account, who could receive funds on their behalf.

She said: “Using an umbrella group isn’t ideal because groups don’t have direct control. It is much better for them to have their own bank accounts.

“It’s not a good long term solution.”

Lucy Findlay, managing director of the Social Enterprise Mark, part of the New Economy Alliance, said they have seen a large rise in new groups being set up across the country. She said during the pandemic communities have mobilised and more funding has been made available.

According to Ms Findlay, the situation is a ‘nightmare’ for both new organisations and established groups needing to change accounts in order to access the loans.

She called for change by the banks.

She said: “We’d like a more ground up approach by the banks and let social enterprises and charities access this funding and set up bank accounts quickly.

“I think social enterprises are really showing they are the type of business needed during the corona crisis. Social and environmental issues are their raison d’être so they are very important for the recovery. They are needed to help us bounce back better.

Earlier this year, thousands of pounds was made available as part of The Communities Fund by Brighton and Hove Council. 

A council spokeswoman explained they were aware of the problem.

She said:  “We have been working with community groups to help find solutions, as we know that at this time it is particularly important that smaller organisations are able to apply for council grants.

“Our advice to community groups is to contact one of the larger established organisations in the city, such as Community Works, to act as an ‘umbrella’ organisation.

“This way, funds can be paid directly to them through the larger group.

“This has already been successful for charities applying for funding from our Engagement Fund for Black and Minority Ethnic Groups and the Resilience Fund for Carbon Reduction.”

More help and advice is available at


  1. Rolivan Reply

    Perhaps East Sussex Credit Union could help.

  2. bradly23 Reply

    sometimes the ‘umbrella’ organisation charges the service to “launder” the money…. (irony, joke, watching too much “lock-down” TV …)

  3. dree Reply

    Tony Blair used to talk about rights and responsibilities. Retail banks like Lloyds, Barclays and Natwest have too many rights and too few legal duties towards their customers in my view.

  4. BAHTAG Reply

    Dree makes a good point above regarding so-called ‘Duties of Banks’.

    However it’s important to know that a bank can only operate in the UK once it has been granted a licence to do so.

    So the problem seems to be that our Gov’t has failed to attach sufficiently detailed conditions of operation that a licensed bank must comply with?

    So yet another task for MPs to take on!

    As a nation many of us were bedazzled by the Blair/Brown mission to make London the banking capital of the world, and to have a service-based economy – with a massive transfer of manufacturing to the Sub-continent and many points east, but mainly to China.

    And look what a pickle our nation’s now in!

    Even without the Covid-19 pandemic austerity had adversely affected millions of UK families, and cuts to fundamental public services, such as health, social care, education, (re-)training, and even to road maintenance, have created a backlog which will cripple our nation, metaphorically and literally, for decades to come – unless we can get a crowd of politicians to at long last show some common-sense, coupled with decency and honesty?

    And this week’s scandal of PPE procurement, with middlemen picking-up hundreds of millions of our taxpayets money for what precisely?

    Apparently partly to bribe overseas factory owners to give priority to UK orders for PPE.

    Come, come, – surely back then GCHQ + the CIA had a database of every kind of business in China – whereby linguists from those agencies could have spoken directly to the owners of, say, the top 100 producers of PPE in China to sell directly to our NHS etc?

    And that debacle, and the lies, over getting about 80 tons of PPE from Turkey – 3 flights by RAF Transport Command, when a single chartered Boeing 747 could have done the delivery cheaper and quicker in just one flight!

    And after all that delay and expensive faffing-around it seems that much of that PPE from Turkey was off-spec and not usable!

    So what to do, when decent politicians seem to be so scarce?

    Whilst we still have a Freedom of Information Act fight at every opportunity to block plans to emasculated it – and maximise the use of its powers to get answers to public-sector issues that trouble you – ideally by using the wonderful free What Do They Know website – mainly by volunteers working towards a better society, and/or to slow our nation’s backsliding.

    The 6th or 7th richest nation?

    Not really, the UN runs a global Index of ‘Purchasing-power Per Person’ (to even-out low-wage countries with low living-costs against high-wage countries). Luxemburg recently lead that table, but the UK was about 25 places below that lucky Dukedom, and so also below most other OECD nations!

    Such a shame thatthe Chancellor’s new investment proposals will do little to correct more than a decade of under-investment in public services and in maintenance of the infrastructure we already have, but will mainly be frittered-away on vanity projects with little or no real economic return!

    Just glitzy boyz toyz (M/F), + lots of dosh for the already rich?

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