Issue - meetings

(Report of the Director of Place and Sustainability to be introduced by the Cabinet Member for Economic Regeneration and Social Inclusion) To consider options to support the Credit Union including the provision of  a subordinate loan.

Cabinet considered a report that sought agreement to issue a subordinated loan to the Credit Union of up to £750k over the next three years.

The Cabinet Member for Economic Development and Social Inclusion advised that the loan was dependent on the Credit Union improving its targeting of loans towards people who were unable to access cheaper sources of credit and that it also required new targets with respect to encouraging regular savings to be met.

In response to a query it was noted that there were no plans to convert the loan into a grant in the future.

RESOLVED:

1. That it be approved that a subordinate loan of up to £750k, to be released in three tranches of £250k, dependent on a satisfactory development plan and performance against targets; the first tranche of £250k to be released in 2012/13 with the further two tranches dependent on a business case and performance review.
2. That in return for injecting further financial support the Council would require the Credit Union to better target their loans towards people in the sub prime market – people on low incomes who are turning to pay day loan companies to borrow money.
3. That the Credit Union would set new targets around savings and loans including supporting sixteen hundred new households, with regular monthly reporting on key performance indicators on membership, loans including membership amongst residents on low incomes and loans to residents on low incomes.
4. That the Credit Union limit its bad debt provision to a maximum of 7% of loans with a review triggered at 5%.