Loan Guarantor Scheme
Purpose
The Council may act as a loan guarantor for community organisations, groups or bodies where it will provide social benefits to the community of the Whakatane District and where it will help to facilitate financial independence by that group or organisation.
Who can apply?
The body applying for the guarantee must be domiciled in the Whakatane District area and be providing a social benefit to the community of the Whakatane District.
How and when to apply?
Applications must be made in writing as submissions to the Annual Plan.
How your application is assessed
In determining whether a guarantee is to be approved, the Council considers the social benefits provided to the community and the following:
- The potential loss of capital
- Where the Council assumes the asset in the case of default, the ongoing cost operating costs or completion costs of the asset
- The nature of the organisation including its management, financial stability, cash flow forecasts and membership.
- The total value of guarantees at any one time will not exceed 3% of the total annual rates levied during that year. Total loan guarantees held at any time shall be taken into account when calculating the Council's maximum borrowing limit.
Examples of potential applications
Guarantee for loan to purchase land freehold
Guarantee for loan for capital works
Accountability
The Council’s Liability Management Policy requires that “As a condition of the guarantee, the guarantor’s annual financial statements are to be promptly given to Council. Should the guarantee be called upon, the Council will take immediate steps to recover the money”.