I am supporting the Task Group that is making recommendations to the SEMLEP Board on projects to be supported by Growing Places Fund. The Board took an initial view that it would charge a commercial rate of interest on loans from the Fund, using as a basis the guidance from the Homes and Communities Agency on the Get Britain Building initiative. However, now that we have reached the point of proposing rates of interest for individual projects, we have been challenged by a local authority, that suggests that they should be charged a zero rate of interest as they are prepared to guarantee repayment within 3 years. I would be interested to hear from anyone who has experience of GPF loans to local authorities and the rate of interest charged.
Our Board has grappled with similar issues Hilary. A paper is being circulated this week in fact with proposals to charge interest at varying levels, ensuring that local authorities do also pay interest, albeit at lower levels referencing the generally lower risk of investments backed by the public sector.
Hi Hilary - we set zero interest rate for LAs, given that they can already access very low interest rates from the Public Works Loans Board. The bulk of our loans are quick turnarounds, which makes it easier. For loans involving commercial partners we charged PWLB rate + 1%.
Hi Hilary, I am supporting two LEPs with their GPFs. One has decided to offer interest free loans to LA's, the other has chosen to charge PWLB rates less 0.5%, recognising that without a discount there is little incentive to use GPF as opposed to PWLB loans. In both cases where there is a State Aid issue the LEPs are using the EU reference rates, as also used by the HCA on its Get Britain Builiding programme. Regards Stephen Pritchard BBP 07973 353677