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CLERK'S BRIEFING NOTE PROPOSED LOAN FOR PAVILION
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SHORTFALL IN FUNDING FOR THE NEW SPORTS PAVILION
From the table above, it can be seen that the current shortfall on funding is calculated to be £52,455 as at 7 January 2009. It appears that all options for obtaining other funding have been exhausted. BORROWING APPROVAL. Although Borrowing Approval approving Sedlescombe Parish Council obtaining a loan not exceeding £90,800 expired on 25/12/08, a letter dated 23/12/08 from the Department of Communities & Local Government confirmed that this has been extended to 31/03/09. SOURCE OF BORROWING. Parish councils are permitted to obtain funds from whatever source they can find (subject to special permission to borrow in foreign currencies) but most councils use the Public Works Loan Board (PWLB) or the clearing banks. Loans may also be taken out from individuals or private or voluntary sector organisations, although councils are advised to seek appropriate advice before considering borrowing from a source other than the PWLB or clearing banks. Property cannot be mortgaged to provide funds. PWLB LOANS. PWLB loans are fixed rate and can be repaid on an annuity basis (each half-yearly payment is of a constant amount, inclusive of principal and interest) or by equal instalments of principal (EIP) where initial repayments are higher but they reduce over the period of repayment. EIP is, overall, the cheaper option but it takes several years to reach a lower repayment amount. Loans may be repaid over any period between 2 and 50 years. Amounts payable on loans from the PWLB are calculated on the assumption that loans will run their full term as agreed when the loans were originally made. If a borrower wishes to make a premature repayment of a loan, either in whole or in part, it should contact the Board giving full details beforehand. The Board will usually agree to accept this request but it should be noted that a premium will be payable when the interest rate on the loan to be repaid is higher than the current interest rate for a loan repayable by the same method and over the same period as that remaining on the loan which it is proposed to repay. When the interest rate on the loan to be repaid is lower than the current interest rate, a discount will be allowed. INTEREST RATES. Due to the current financial position, PWLB interest rates are very low ranging from 2.09% up to 5 years and 3.45% up to 15 years. The rate may drop even further before the Parish Council takes out its loan. METHOD. Approximately two weeks before the loan is required, an application form and a blank, cancelled cheque must be sent to the PWLB. DRAFT RESOLUTION That the RFO is authorised by Sedlescombe Parish Council to apply to the Public Works Loan Board for a £52,500 fixed rate loan on the following terms:
Mrs P Raymond |