Unmet demand for finance among individuals and organisations that do not qualify for traditional bank funding has reached £6bn, according to research from the Community Development Finance Association (CDFA), which calls for more development of alternative financing options.

Its report,Mind the Finance Gap: Evidencing demand for community finance looked at current demand and supply of finance for business, civil society organisations, individuals and homeowners.

The research, carried out by consultancy ICF GKH and sponsored by RBS Group, calculated that the area of greatest unmet need was individuals (£3bn-£3.5bn), followed by businesses (£1.3bn), civil society organisations (£0.9bn-£1.7bn) and homeowners (£0.25bn).

The report says this makes the total annual demand for finance which is not being met by mainstream funding methods to be between £5.45bn and £6.75bn, but says that in 2012 community finance organisations, which provide an alternative source of lending, only lent an estimated £0.7bn.

It concludes that this scale of unmet demand cannot be met by traditional bank finance but via a partnership of public, private and social investors. The CDFA also estimates that if Community Development Finance Institutions (CDFIs) had the capital and scale to fill just half of this funding gap 68,293 jobs and 38,935 businesses would be created.