Business start-up loan scheme

Purpose

The Babergh Business Start-up Loan Scheme provides development finance to assist the establishment of new small businesses that will operate within the Babergh administrative area. The scheme’s aim is to help those entrepreneurs with particularly well considered business plans and competencies to create new employment opportunities.

The scheme provides interest free loans of up to £2500 and can offer a repayment “holiday” of up to twelve months. Repayment of capital may then be made over a further two year period, enabling funds from the loan to be put to work before repayment commences.

The administration of the scheme is shared by Babergh District Council  and the Ipswich and Sudbury Enterprise Agency (IPSENTA)

Loans must be linked to positive job creation or the purchase of capital equipment intended to establish the new enterprise.

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Applications

Applications must be made to the Ipswich and Sudbury Enterprise Agency using the standard application form. Applicants are required to submit a detailed business plan and details of how the loan will be used and repaid. If required, guidance on developing a suitable business plan is available from the Ipswich and Sudbury Enterprise Agency.

Applicants will be required to accept the conditions detailed in the schemes standard conditions.

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Repayments

Applicants are required to make monthly repayments by direct debit transfer.

 Example 1 A graphic designer who has been employed by a large local company for several years now wishes to start their own small business, initially operating from home. They require computer equipment at a cost of £1500. They have identified a number of new business prospects and have developed a detailed and achievable business plan.

After discussions with their adviser at the Enterprise Agency an application is made to the Council for a loan of £1500. The loan is approved with the following terms:

• First repayment to be made no later than six months after the date of the loan advance
• 12 repayments of £125 to be made on first of each month
• Final payment to be made no later than 18 months from the date of the advance.
• Responsibility for the repayment of the loan remains the personal responsibility of the applicant.

 Example 2 Two electronics engineers wish to create a new partnership that intends to provide technical support and emergency back-up for the Shipping Industry. They have negotiated to rent a small unit to provide an office and test facility. They require to purchase test equipment to the value of £7500. The partners are able to provide £5000 from their personal funds.

Following discussions with the Enterprise Agency a business plan is prepared demonstrating the return on investment that the equipment can be expected to produce over the next 36 months. An application for £2500 from the Business Start-up Loan scheme is submitted to the Council.

The loan is approved with the following terms:

• First repayment to be made no later than 12 months after the date of the loan advance;
• 24 repayments of £104.17 made on first of each month;
• Final payment no later than 36 months from the date of the advance;
• Responsibility for repayment of the loan remains with the partnership.

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Further details

Further information about the Business Grant Loan Scheme, and an application form, are available from your nearest IPSENTA office:

Felaw Maltings, 44 Felaw Street, Ipswich IP2 8SJ
Telephone - 01473 407001/407300
Fax - 01473 407301
Email -  mailto:Ipsenta@SuffolkEnterprise.co.uk
website - http://www.suffolkenterprise.co.uk/

or:

South Suffolk Business Centre, Alexandra Road, Sudbury CO10 2ZX
Telephone - 01787 379164 Fax: 01787 883221
Email - sudburyent@SuffolkEnterprise.co.uk
website - http://www.suffolkenterprise.co.uk/

For general information please contact:

Economic Development Team, Corks Lane, Hadleigh Ipswich IP7 6SJ
Telephone - 01473 825872
Fax - 01473 825708 
Email - mailto:ecodev@babergh.gov.uk 

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Standard conditions

1. Loans will only be made available to assist the Start-up of new small enterprises that will be principally located within the administrative area of Babergh District Council.
2. Loans will be approved or refused on the full discretion of the Council, after consultation with the Ipswich and Sudbury Enterprise Agency. The Council is not obliged to provide reasons why a loan application may be refused.
3. The loan scheme is not intended to replace funding readily available from other sources (for example High Street Banks). Evidence will normally be required which demonstrates that an alternative source of finance either cannot be obtained, or would require too onerous security.
4. Loans are paid from a financially limited fund. Applications will be considered on merit, but also on a first come, first served basis whilst funds are available. Applications for commitments for possible funding in future financial years will not be considered prior to the March immediately before the next financial year.
5. Applicants must be able to demonstrate their competency and knowledge of the business sector in which they propose to operate in.
6. It will be expected that applicants have fully consulted the Ipswich and Sudbury Enterprise Agency prior to making formal application for a loan. A comprehensive business plan which includes full details of the purpose the loan, together with a projected profit and loss account and cash-flow forecast must be included in all applications.
7. Loans may be for any agreed amount between £500 and £2500. The terms of the loan will be agreed prior to a formal contract being established. A repayment “holiday” of up to twelve months may be negotiated, allowing the loan monies to be put to work, prior to repayments being required.
8. Repayment of the loan must be made by direct debit or standing order on a monthly basis. The maximum term allowed will be 36 months for full repayment of the loan.
9. Loans will be available to the trading entity, whether sole trader, partnership or limited liability company. Loans will not be available for companies proposing to employ more than 5 full-time (or equivalent) employees or projecting to have a turnover greater than £250,000 in the first year of trading.
10. Any monies advanced by the scheme must be used for the purpose stated in the application, the Council will request evidence of actual expenditure.
11. Applicants must provide adequate insurance to safeguard any equipment purchased. In the event of the business being sold or ceasing to trade, the applicant will remain responsible for the repayment of all outstanding monies.
12. Providing repayment is made within the terms of the agreement, monies advanced will not be subject to any interest payments. If any payments lapse the Council reserves the right require the full and immediate settlement all outstanding monies and to charge interest at the currently prevailing Public Works Loan Board (PWLB) interest rates.
13. Applicants will be required to provide at least two trade references and a bank reference. All costs for references will be the applicants responsibility.
14. Applicants will be required to authorise the Council the right to inspect and consider any repayment history on any financial accounts between the business, or the principals of the business, with Babergh District Council or other Councils (For example Council Tax or National Non-Domestic Rates) in determining any applications.
15. For monitoring purposes applicants may be requested to provide subsequent trading and financial information, prior to, or at the time of repayment of the loan.

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