Our purpose at Resonance is Transforming Lives Through Investment and one of the ways we do that is by finding creative financial solutions to help transformational enterprises continue to deliver and increase their impact. 

One such innovative solution came about from our work with ACH (Ashley Community Homes) in 2018. Together, ACH and Resonance developed the UK’s first Sharia compliant financing model for purchasing properties to house refugees.

In our Twentieth Anniversary Book, CEO of ACH Fuad Mahamed, recalls how the collaboration came about.

Resonance support with ethical investment ACH is a leading provider in refugee integration services, operating in the West of England and the West Midlands whilst offering advice and assistance across the UK and beyond. Since 2008, the company is resettling over 2,500 individuals yearly by providing secure housing, culturally sensitive support and vocational training, provided by its training arm – Himilo. Himilo (Hope for the better) focuses on upskilling individuals and supporting them towards higher level employment to develop their independence and contribute to the wider economic ecosystem. In 2018, ACH wanted to change its business model from lease based to ownership. After many unsuccessful attempts of establishing social finance which is sharia complaint in the sector, we went to Resonance. Together we devised a ground-breaking Yield Sharing product which is both sharia complaint and appealing to non-Muslims. We have bought our first 3 properties using this mechanism.

Encouraged by this success, ACH is in an early stage to trial a yield mechanism for pre start-up, self-employed, microbusinesses and early stage growth businesses delivered by a Community Anchor. The target market for such loans are black and ethnic minorities, refugee and marginalised entrepreneurs currently excluded from the business finance market. It further details opportunities for additional investors to contribute pro bono or investment to create a national provision, either by supporting the scaling up of this service or by contributing to the growth of the fund itself.

Typically refugees and migrants struggle to access finance. For some groups in the community, the key issue is that interest bearing finance are not permissible. The type of business funding most readily available is the debt-based loan model where the entrepreneur in effect rents money for a period for a cost (interest). Typically, this requires the entrepreneur paying a setup fee, then repaying the money borrowed and paying the charge for using the money, (interest). This model also requires the entrepreneur to be able to present a ‘creditworthiness bundle’ to the lender including electoral registration, payslips, steady income, credit history, rent history/ mortgage payment history, address history, ability to personally guarantee repayment, often access to other financial guarantors alongside personal/ cultural ability to use interest bearing loan finance.

A range of lenders are now emerging, prepared to provide smaller loans to entrepreneurs who present with an incomplete ‘creditworthiness bundle’ and using the same yield sharing principles as our own bond. Before our work in proving such a mechanism could work for all concerned this mechanism felt completely out of reach. All these ambitions above have been made possible by the work initiated and pioneered by Resonance; this work is helping to create a brighter future for refugees.