Presentation on theme: "London Business Loans (Wholesale) Ltd London Councils."— Presentation transcript:
London Business Loans (Wholesale) Ltd London Councils
London Business Loans (Wholesale) Ltd is managed by GLE oneLondon It is currently comprised of: private sector investor capital and loans private equity investor capital and loans public sector equity LBL continues to seek: further public and private sector capital further retailers and retailer deposits to enhance its lending The Wholesale Fund has been devised for the London region is a tested model in operation for since late 2007
LBL Board Kingston Smith chair (2% share) LDA directors (49% share) GLE directors (49% share) Investors Co-operative Bank LDA Retailers GLE oneLondon – NLEF Westminster – Bexley – Lambeth Direct Loans Managed by GLE oneLondon Fund Manager GLE oneLondon
The principal activities of the fund are to: Attract investors Increase the size of the fund to ensure sufficient capital is available to lenders to small and medium sized enterprises Attract retailers Increase the number of retailers that obtain facilities with the fund to lend to small and medium sized enterprises Lend directly Under certain defined criteria lend directly to small and medium sized enterprises
Progress since operational activity began in late 2007: (All figures are accurate as at 31/08/2009) Three equity investors: GLE oneLondonequity £250k London Development Agencyequity £250k Kingston Smithloan £10k Three loan investors: Co-operative Bankloan £3m Kingston Smithloan £100k LDAloan £2.25m Five retail loan providers: GLE oneLondonfacility £1.3m North London Enterprise Fundfacility £500k Westminsterfacility £135k Bexleyfacility £250k Lambethfacility £400k
To date the fund has lent a total of £3,888,000 to 149 businesses retaining the employment of over 400 people. All these businesses would not have been able to access mainstream finance and all were to small and medium sized businesses in underserved and disadvantaged communities in London. The majority of these loans were for sums less than £50k, although a handful are for much larger amounts to social enterprises.
The uniqueness of the fund is that retailers can access capital by risking only a fraction of their own. The fund leverages their cash risk deposit typically by a factor of 4, for example, allowing the retailer to access a facility of £200k by risking a cash deposit of only £50k. Furthermore, their cash risk deposit is only reduced by 50% for every written off loan, with the remainder being risked by the Fund itself.
The retailers of the fund are typically Community Development Finance Institutions (CDFI) but can be any non-bank lender who provides loans to Londons businesses when they have difficulty accessing mainstream finance. We have recently also set up Council retailers where their facility was managed by GLE oneLondon on their behalf, in these cases GLE oneLondon has worked with local Councils preferred and funded Enterprise Agencies. This allows the fund to reach the clients of established small business lenders without having to duplicate what is available already in the market.
The main return to existing investors is by way of Community Investment Tax Relief (CITR). This tax relief is 5%. The main return to London Business Loans is often interest on facility provided, typically 5%. The main return to retailers is their fees and interest on the loans provided. Where GLE oneLondon has taken on the management of the facility and work related to providing loans, the retailer has foregone this and provided some form of either revenue funding and/or agreed a set level of lending for which any remaining cash risk deposit is retained by GLE oneLondon.
Timeframes Investors LBL is already an established fund that is ready to receive investors. The timeframe will depend largely upon devising a structure to ensure a return for any investor appropriate to its requirements. Retailers (or pseudo-retailers) New retailers need to go through a process where their ability to lend is tested against their previous track record as well as an evaluation of their current systems and processes. This may take one or two months depending on the complexity of the organisation. GLE oneLondon is already an established retailer and can act as a the loan management team for a pseudo-retailer wishing simply to place a cash risk deposit. This can work very quickly and typically the limiting time factor is the organisation providing the cash risk deposit and identifying and agreeing special terms of their lending needs.
Next steps: LBL to invite each Council to examine and understand its operations Agree a structure viable for each Council to achieve its business objectives Once these two vital steps are achieved we will have a clearer picture of further progress
Contact details: Nicholas Nicolaou Fund Manager of London Business Loans (Wholesale) Ltd & Managing Director of GLE oneLondon Telephone: