Decision details

To request authority for a Covid Recovery Fund of up to £20m plus a 20% contingency of £4m to be established, such funds to be ringfenced for Council Wholly-Owned companies (WOCs) only, from within the existing Business Loans Fund. The authority to approve loans to individual companies and agree terms on a case-by-case basis within the principles set out below to be delegated to the Director of Resources, except that in the case of Lancashire Management Operations Limited, to avoid a conflict of interest, this authority to be delegated to the Chief Accountant.

The Leader of the Council agreed the recommendations as outlined above namely:

1. To note the progress Council Wholly Owned Companies are making in respect of producing Covid recovery plans.

2. To approve the creation of a Covid Recovery Fund of up to £20m plus a 20% contingency of £4m, such funds to be ringfenced for Council Wholly Owned Companies from within the previously established Business Loans Fund
3. To require that Wholly Owned Companies requesting cashflow support are able to demonstrate a cumulative breakeven income and expenditure position by the end of year 5 (current year plus 4) of their recovery plan or as close as possible to this term.

4. That the loans are tailored to the individual circumstances of the company and its recovery plan, that loans may be offered on either:

a)                  an interest-only basis with balloon principal repayment; or

b)                  monthly repayments of interest and principal.

5. That loans are offered at a fixed rate over 5 years, thereby providing the Wholly Owned Companies with certainty over future repayments requirements, but consequentially the Council carrying the risk of adverse interest rate movements.

6. That temporary cashflow loans on existing agreed terms be offered to Wholly Owned Companies until approvals for a Covid recovery cashflow loan on the above terms are in place, such temporary cashflow loans to be repaid from the Covid recovery cashflow loan when issued.

7. That all Wholly Owned Companies loan agreements be reported to the Business Loans Fund Panel with the authority to approve loans to individual companies and agreement of terms on a case-by-case basis within the principles set out above to be delegated to the Director of Resources, except that in the case of Lancashire Management Operations Limited, to avoid a conflict of interest, this authority to be delegated to the Chief Accountant.