Applying for a RR loan

The decision to approve a loan is made by the gathering where all member coops can feed in.

Eligibility

Once a coop is a full member of RR, they can apply for a loan. Technically this can happen at the same gathering as they officially join, but it often comes later. All RR loans made to date have been below £100,000.

The amount RR has available to lend is a factor coops will consider when applications come up, which is reported on in the Finance Report in each gathering agenda.

Application Process

In order to apply for a loan, coops should fill in the 40 year modelling spreadsheet and complete a RR loan application form.

It is expected that coops will be in touch with Radical Routes Finance Group (FG) while they are considering applying for a loan. FG can help with filling in a business plan, or this can be completed entirely by the coop.

In all cases, FG will assign the applying coop a liaison. The liaison will look over business plan drafts, answer questions such that there is a viable plan.

If the applying coop has a member of FG, then another FG member will be assigned as the liaison. All communication about specific coop business plans should be done over email, CCing in either the liaison or the FG email.

Once the 40 year spreadsheet is filled in, and the liaison has been over it, multiple FG members will recreate and stress test this model at an internal meeting. It is likely at this point that there will be questions and clarifications. Once FG is satisfied, they will write a recommendation.

Finance Group will then submit this recommendation, along with the modelling spreadsheet, and the RR loan application form to the Agenda Sec, for the upcoming gathering to make a decision on.

After it has been approved

Documents that the coop sends the RR finance worker

The coop should supply to Radical Routes finance worker, copying in RR Finance Group: - a copy of up to date buildings insurance policy (in order to assess that the property is adequately insured) - a bank statement less than six months old which shows the bank details (account number and sort code) - the most recent annual accounts

AND, IF NEEDED: - If buying a new property, a copy of (all) valuations and surveys (to assess that the property is in an acceptable condition) - If required by the proposal, proof that the estimated loan stock figures have been turned into confirmed investments - If applicable, an outline of how planning regulations/licensing conditions/building regulations will be met/dealt with as needed to make the business plan viable - If required by the business plan, proof that guarantors have been found

Coop fills out the Loan Offer Letter Release Form

Then, RR Finance Worker will send the coop a Loan Offer Letter Release Form to complete (to confirm the coop's name, address, email, reg no., loan amount, loan interest rate, term, fee (flat £350), security, and any special additional conditions.

The RR finance worker then sends this contact and loan info to CCF.

CCF sets up a loan agreement and direct debit for the coop to sign

CCF (Coop and Community Finance - who administer RR loans and are authorised to take direct debits) asks the coop for the full name, email and phone number of 2 coop members, and 1 witness, in order to finalise the documentation and issue the DocuSign.

CCF emails the coop a loan agreement - CCF sets up the docusign so that the agreement gets emailed to be electronically signed by the first member, then the 2nd member, then the witness.

CCF then emails the coop an attachment called the Direct Debit instruction (1 page form). This should be printed by the coop, completed, signed (using a pen) and posted back to CCF. CCF will then forward this to the coop's bank in order to set up a regular monthly direct debit payment bank.

RR sorts out the legal charge with solicitors

If it is the first RR loan, then RR and the coop need to sign the legal charge, and register this with the FCA and the land registry. If another lender is involved (e.g. for the main mortgage), the conveyancing solicitor will also organise the signing of a dead of priority between the main lender and RR. The legal charge and/or deed of priority need signing and registering. The loaning coop must provide the RR’s solicitor with the details of any other lenders involved. This is dealt with by either the conveyancing solicitor (if the coop is purchasing a property) or the RR solicitor (if the coop is not buying a property)

FG holds a loan release meeting

After these steps, RR Finance Group will hold a loan release meeting to check the documents and confirm the release of the loan. Currently, this FG meeting requires five individual members representing at least four co-ops with no conflicts of interest in the matter discussed. Previous members of Finance Group may be co-opted. This can consist of individual members of member co-ops or of associates. All involved should have an understanding of the issue being discussed.

The finance worker will move any money around in the RR bank accounts and set up the payment from the main RR bank account. This will need authorising.

Additional notes: Finance Group should be kept in the loop about any changes and conditions to the loan proposal. If there are major changes, the loan might need a new proposal to reflect the changes. RR loans can be drawn down for 9 months after the date of the gathering where the loan was approved. If it is not finalised within 9 months, which is often the case, the coop should apply for an loan extension from the network at a gathering.