Cam Gracey, Chief Financial Officer, talks about our Community Loans and how employing them provides flexibility to financing of capital projects.

We see community loans as a way we can provide flexibility through our pūtea, extending our support of projects which provide equitable and sustainable outcomes in the community for the long-term.

A community loan is not a grant and must be repaid in full, within the terms and conditions agreed at the time of the loan. Loans are secured either over the property that the loan is helping to purchase or other property or asset.

There are no set closing dates for community loans. Community organisations can apply at any time, but it can take up to three months to hear the outcome of the loan application.

We may consider applications for loan funding from the following:

• Formally constituted groups serving one or more of our four funding regions.
• Organisations which can provide clear evidence of its power to borrow.

Organisations will need to demonstrate:

• The capacity and capability within their management and governance to be able to manage a loan
• The ability to service a loan (in other words forecasts which evidence the ability to meet the repayments throughout the loan period)
• Sufficient security to cover the value of the loan

Loan funding may be used for a capital project or asset that has long term benefit.

Loan funding will not be made to retire current debt.

Community loans may be offered at our discretion on the following terms:

• Generally, terms are for up to five years.
• Loans are typically up to $1 million.
• Interest payable will be calculated at time of application, depending on assessment factors.
• The ability to service a loan will determine the amount advanced.
• The fees in respect of loan documentation and securities registration will be at the applicant’s cost.
• An assessment fee of 0.2 % of the loan amount applied for may be charged.
• Repayment of principal and interest is by monthly instalments

We require the following information in consideration of a community loan application:

• Financial cash-flow projections evidencing ability to service the loan with sufficient debt servicing cover.
• Evidence of the rules/constitution permits borrowing.
• Annual financial statements.
• Year-to-date financial statements.
• Budgets.
• Sale and purchase contract or current quotations.
• Valuations.
• Insurance policies.
• Confirmation of other funding and any other funding being sought.

For housing projects which align with our Strategic Housing Pou we can look at larger loans with a longer term.

A good example of a recent community loan is the Te Āwhina papakainga development in Motueka.