Purpose of Loan The LA will make a loan for any purpose it agrees, as in the interest of the school, provided it is for the enhancement, replacement or provision of an educational asset which will have a life at least as great as the duration of the loan.
Application A request for a loan must be made by resolution of a governing body.
Scope Schools in deficit should not apply. Academy schools and schools applying to become an Academy school are outside of scope for this scheme. If during the term of the loan a school becomes an Academy, the outstanding balance (including interest) will be payable on transfer.
Approval Payment of the loan will be authorised by the Head of Finance. Loans will only be made to those schools which have submitted accepted balanced financial plans. The Strategic Manager will give due consideration to any request that has implications for the schools organisation plan.
Maximum Amount of Loan The maximum amount of loan that will be allowed under this scheme will be 7.5% of the school’s budget share at the date of application. Loans will not be considered for sums under £5,000. It is considered that repayments of 1.5% of the school’s budget per year would be a safe level to place as a call on the school budget share of any one year.
Duration The maximum loan period will be five years from the date of the first advance.
Advances Advances will be made when required. Applications will need to reach the Financial Services Manager at least one month in advance of the date at which the loan is required.
Security A school may have as many loans as it wishes subject to availability of resources and the total not exceeding the maximum outlined above with each individual loan being in excess of £5,000. The LA will require evidence from the governing body that the school is able to meet the repayments, that the scheme is in the interest of the school, and that the loan is actually spent on the purpose intended.
Availability Applications for loans will be dealt with on a first come first served basis.
Interest Interest will be charged at the Base Rate (from the date the advance was made) plus 1% on the debt outstanding. Repayments will be made on the 1 April in the year after the date of the advance and in subsequent years. Payments will be by the recharges system, and an advice note will be issued on the due date.
Early Repayments A school may repay the loan and any accrued interest in full at any time.