SLIDE 1
Social Lending, Wellington, April 2011
Social Lending, Wellington, April 2011 Community Loans Two - - PowerPoint PPT Presentation
Social Lending, Wellington, April 2011 Community Loans Two - - PowerPoint PPT Presentation
Social Lending, Wellington, April 2011 Community Loans Two Businesses Investments Grants capital of $185m $8 -10m p.a. invested worldwide Southland only Loans commercial only community only community
SLIDE 2
SLIDE 3
Two Businesses
- Investments
- capital of $185m
- invested worldwide
- commercial only
- community benefit
secondary
- Grants
- $8 -10m p.a.
- Southland only
- community only
- commercial benefit
secondary
Loans
SLIDE 4
Community Loans
- A very useful tool to help community organisations
- Made about 25 community loans - $9K to $3.4m
- No such thing as a free lunch
– somebody has to pay for the use of the capital – charge any concessions made on interest to our grants budget
- Has to be:
– an income stream – solid due diligence – appropriate security – a preparedness (by us) to enforce security
- Means we can recycle capital, and leverage
- ur grants budget
SLIDE 5
Treatment of Interest
- Example:
– Lend $800,000 to community organisation X – “Opportunity cost” interest rate = 6% – Interest forgone therefore $48,000 p.a. – Approve grant of $48,000 to community
- rganisation X to “pay” this interest cost
- Accounting entry is:
– Dr Grant approved $48,000 – Cr Interest received $48,000
- So the amount remaining in our annual
grants budget is therefore $48,000 less; we are recognising the use of our capital
SLIDE 6
SLIDE 7
SLIDE 8
SLIDE 9
Topoclimate
Local Govt
SLIDE 10
Maori Before a Waterfall
Bridging
SLIDE 11
Stewart Island’s Golf Club
From Renting to Ownership
SLIDE 12
Old Bank of New South Wales
Suspensory
SLIDE 13
Arrowtown Cottages
Suspensory
SLIDE 14
Southland Outdoor Stadium Trust
Repaid by our own Grant
SLIDE 15
Hockey Turf Trust
Refinance Guaranteed by Council
SLIDE 16
Marae
High Street Bank Wouldn’t Lend
SLIDE 17
Croydon Aviation Museum
Change of Purpose of Grant
SLIDE 18
Yule House
Ongoing Income Stream
SLIDE 19
Edendale Vintage Machinery Club
Ongoing Income Stream
SLIDE 20
Southland Heritage Buildings Preservation Trust
Back to Back Lending
SLIDE 21
Rest Homes (2)
More Comfortable Financing
SLIDE 22
Borland Lodge
Harvesting a Future Asset. Now
SLIDE 23
Velodrome
In a Tight Corner
SLIDE 24
Bluff Healthy Homes
Lending to Individuals
SLIDE 25
Southland Outdoor Stadium Trust
Restructuring Balance Sheet
SLIDE 26
Events – Waimumu Southern Field Days
Guaranteeing Interest
SLIDE 27
Social Lending, Wellington, April 2011
SLIDE 28
SLIDE 29
Velodrome – a loan that went off track
SLIDE 30
Velodrome – a loan that went off track
- We had major reservations:
– Very specialised facility, hard to justify $11m of community funding – Very optimistic operational budget, which we believed they would never achieve. They forecast that they would have positive cashflow, we forecast an annual operating cash deficit of around $1m
- We granted $1.6m (they’d asked us for $4m), and said if you
can raise the rest of the capital funds needed, good for you
- Signed a contract to build it, when they didn’t have
all the money they needed
- Ended up with an $800K shortfall, with contractors
needing to be paid
- Bugger!
SLIDE 31
Velodrome – a loan that went off track
- We agreed to advance them a loan of $800K to
cover their shortfall
- Two years later they said we’d promised to convert
the loan to a grant. We hadn’t.
- By then their annual operating deficit was around
$1m
- We called a meeting of all the major funders: - ILT,
ICC, SDC, and us, and brokered a deal:
- - ILT would grant $500K p.a.
- - ICC would grant $400K per annum
- - SDC would grant $50K per annum
- - we would grant $80K per annum, and write off
loan principal over 10 years
SLIDE 32
Social Lending, Wellington, April 2011