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The Babergh Business Growth Loan Scheme provides development finance to established very small businesses operating within the Babergh area. The scheme's aim is to help these growing small companies “take the next step”, perhaps by investing in new equipment or training. The scheme provides interest free loans of up to £5000 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 improve competitiveness.
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Applications must be made to the Ipswich and Sudbury Enterprise Agency using the standard application form. Applicants are required to submit a financial history, 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 either by standing order or direct debit transfer.
Example 1 A sole trader wishes to replace their computer equipment at a cost of £1500. Although having a viable business they have already reached an agreed overdraft limit with their bank which cannot be currently extended. 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 A small limited liability manufacturing company wishes to purchase an injection moulding machine for £10,000. They have recently purchased other equipment with a loan from their bank and have just started making repayments. The company's owners are able to provide £5000 from their personal funds but their bank is unwilling to make a further loan at this stage. Following discussions with the Enterprise Agency a business plan is prepared demonstrating the additional income that the injection moulding machine is expected to produce over the next 36 months. An application for £5000 from the Business Growth 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 £208.34 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 limited company.
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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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- Loans will only be made available to assist the growth of small and micro-businesses which are principally located within the administrative area of Babergh District Council.
- 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.
- 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.
- 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.
- Applicants must be able to demonstrate that their business is already trading viably. They must have a product or service which is already generating income, thus are beyond the ideas stage. Supporting documentary evidence will be required, for example: Accounts, Balance Sheets etc.
- It will be expected that Applicants have fully consulted the Ipswich and Sudbury Enterprise Agency prior to making formal application for a loan. A 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.
- Loans may be for any agreed amount between £500 and £5000. 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.
- Repayment of the loan must be made by direct debit on a monthly basis. The maximum term allowed will be 36 months for full repayment of the loan.
- Loans will be available to the trading entity, whether sole trader, partnership or limited liability company. Loans will not be available for companies employing more than 5 full-time (or equivalent) employees or having a turnover greater than £250,000 pa
- Any monies advanced by the scheme must be used for the purpose stated in the application, the Council will request evidence of actual expenditure.
- 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.
- 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.
- Applicants will be required to provide at least two trade references and a bank reference. All costs for references will be the applicants responsibility.
- 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.
- For monitoring purposes applicants may be requested to provide subsequent trading and financial information, prior to, or at the time of repayment of loan.
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