Agenda item

Report number HOF235 by the Head of Finance.                          (Enclosure)

The Head of Finance summarised report number HOF235 on a small business loan scheme and hardship awards for businesses.

Small loan scheme

Provision had been included in the Council’s budget for 2013/14 to fund a loan scheme to support the expansion of small to medium enterprises (as defined by the EU). It was noted that during the current financial climate financial institutions had been reluctant to lend money. The proposal was based on a scheme developed by Portsmouth City Council. The Council would make available loans up to the value of £10,000 (constituting no more than a third of the loan) to match similar levels of capital investment by firms and banks.

The loan would be repayable over three years and the scheme included an option for a payment holiday. The application criteria required a confirmed commitment from the bank. Interest would be payable at the Public Works Loan Board rate which meant that the authority would not make a profit but would be no worse off by running the scheme.

Members broadly supported the principles behind the loan scheme but suggested that there should be a minimum loan amount of £4,000 and a maximum loan amount of £10,000 with respect to the Council’s element of the overall loan the business was seeking.. It was also suggested that applications should be considered by the Economic Development Portfolio Holder, a member of Resources PDG and a member of the Council’s economic development team. Applicants would have to demonstrate their potential for growth and the value the business was contributing to the  local economy.

The PDG briefly discussed the advertising of the scheme. It was suggested that the Council’s Economic Development team was well-placed to promote the scheme through its contacts.

Recommendation:

1.    The Council should set up a small business loan scheme, providing loans between £4,000 and £10,000 as part of a three-way match funding arrangement with the bank and the applicant.

2.    The applicant should provide evidence of support from the bank with their application.

3.    The board for considering applications should comprise the Grow the Economy - Economic Development Portfolio Holder, a member of Resources PDG and an officer from Economic Development.

4.    The principles behind the scheme should be as set out in report number HOF235.

Hardship relief

The Council ran a statutory scheme of hardship awards for businesses. The Council had a discretionary power to reduce all or part of a business rates bill if the authority is satisfied that the ratepayer would suffer hardship if relief was not granted or that there was a direct benefit to the ratepayer or the community and there were no adverse impacts to other ratepayers or the community as a result of awarding relief. Hardship relief was already available to businesses as a short-term measure. The proposals in report HOF235 were designed to make the scheme more transparent by promoting them and introducing scoring criteria:

·         History and future planning – the reason for hardship, whether there was an improvement plan and whether the granting of hardship would be effective

·         Loss of amenity – the effect on the local community, whether there are similar businesses, the market served by the business and whether the area had other vacant properties

·         Employment implications – number of people employed and other employment opportunities in the area

·         External factors – regional national and global factors affecting hardship beyond the organisation’s control

It was suggested that decision-making in relation to hardship relief should be taken by Members based on an officer recommendation.

Recommendation:

1.     The Council should implement the assessment criteria (as stated in report number HOF235) for consideration of applications for hardship relief.

2.            Decision-making in relation to hardship relief should be taken by Members based on officer recommendations.