Bristol Pound Business Borrowing FAQs

 

The Basics

Who can get an interest free loan?

Any business member of the Bristol Pound that has been trading for 2 or more years and has a turnover of £25k+ per annum. For details on becoming a Bristol Pound business click here.

How much can I borrow?

Borrow £1,000 – £15,000

What are the pre-requirements?

You must be a Bristol Pound fully incorporated business member with a turnover of £25,000 per annum and a minimum of 2 years of filed accounts history is required for any application to be considered. We will use an online credit checking service just like you go through when lending from a bank or taking out a mobile phone contract.

Can I spend loan funds anywhere?

You can spend your loan money with any Bristol Pound member who agrees to accept the 5% transaction charge as a “finders fee”.

Do I have to spend my loan funds in Bristol?

Loan monies must be paid to Bristol Pound members. Any independent business registered in the region of the old County of Avon is eligible to be a Bristol Pound member.

Do I have to be a Bristol Pound member?

Yes. Click here or call 0117 929 8642 for information on joining.

How do I become a member?

Click here for more information about becoming a member.

Will the APR be affected by the purpose of the loan?

No. Unlike the banks, we won’t offer preferential rates according to the use of the loan.

Can I take out a loan as a private individual?

No. We will only be offering loans for business use.

Will you check my credit record?

Yes, we will use an online credit checking service. Details will be provided when you apply.

Can you offer any help and support with my application?

We’re always happy to help. Just email [email protected] or call 0117 929 8642

 

The Concept

How are you able to do this?

Bristol Pound CIC is a not for profit organisation and we don’t have shareholders. As a Community Interest Company our assets are locked in, meaning the scheme is run for the benefit of the members and the wider community rather than to maximise the company’s profits to enrich the directors.

This allows us to offer interest-free credit on the loans and do what’s best for Bristol. If the network generates income beyond its running costs there would be scope for profit distribution among Bristol Pound members.

We do need to make some revenue to cover the interest we will be charged by the underwriters, but instead of making the borrower pay, we charge a “finders fee” to the members who benefit from the extra business generated through the loan. This takes the form of a 5% transaction charge levied on all payments from the loan account.

Is this a brand new idea? If not, where has it been done before?

Money lending and offering credit is a very old concept, whether the money comes from mainstream banking or the many businesses who offer credit to their customers

There are three ways this scheme differs from others which have come before it:

  1. Your loan is interest-free, as long as you stick to the repayment terms in your contract.
  2. The cost of the loan to Bristol Pound CIC is covered by a 5% transaction charge on payments from the loan account – this is in effect a ‘finders fee’ which the supplier pays in recognition of the new sale, which has only been made possible by the loan.
  3. The loan scheme is run for the benefit of Bristol Pound members and the wider community, not for shareholders

Where is the loan money coming from?

Loan funds are put forward by the Bristol Credit Union. Click here for more details on the Bristol Credit Union.

 

Charges

What are the charges?

We are supplying interest-free loans to businesses and there are no transaction fees for for the company taking out the loan, provided the repayment schedule is followed. For late payments, interest will be charged at 10% pa on the amount that is overdue up until it is paid.

However, the supplier(s) who you spend the money with will pay a transaction charge of 5% on the money paid.

What is the First Supplier Levy (FSL)?

We need to make some revenue to cover the interest we will be charged by the underwriters, so instead of making the borrower pay, we charge a “finders fee” to the members who benefit from the extra business generated through the loan. This takes the form of a 5% transaction charge levied on all payments from the loan account. This Finder’s Fee is also known as the First Supplier Levy or FSL.

Why does the supplier pay more in transaction charges?

We believe both the benefits and costs should be shared across the Bristol Pound network, so as the supplier is making a sale they otherwise would not have, we believe they are best placed to carry this charge

How much does it cost to apply for a loan?

Nothing. There are no loan arrangement fees, and no charge for closing your account as long as your loan has been repaid according to the schedule in your contract.

 

 

Repayments

How long do I have to repay?

Repayments will be made over a 12 month period.

What if I am late with repayment?

For late payments, interest will be charged at 10% pa on the amount overdue until it is paid.

Can I choose my monthly repayment date?

Yes. See terms and conditions for full details

Do my repayments have to be made in Bristol Pounds?

Yes, repayments will be made through your Bristol Pound account. If your Bristol Pound income will not cover your loan repayments, you can top up your Bristol Pound account by transferring sterling to the account.

When do I have to pay off the loan?

Within 12 months of the commencement of the loan agreement.

How much will I pay in total?

You will only ever pay back the value of the loan you took out e.g. if you borrowed £10,000 you will pay back exactly £10,000. No interest will be charged provided you stick to the repayment schedule. You just need to make sure you have sufficient funds in your £B to meet the repayments that are scheduled.

 

Risks

Is it secure? What if someone hacks into my account?

We offer a “bank-level” secure system, with our online banking powered by the award-winning Cyclos software. This highly secure system is used for banking and complementary currencies around the world, including the Bristol Pound, and is audited regularly to ensure it remains at the forefront of application security.

Will taking out a Bristol Pound loan affect my credit score?

Yes – in the same way that taking out a loan with your bank would. If you repay the loan instalments in full and on time your credit rating will be positively affected, and if you don’t then it will be negatively affected.

If I take out a Bristol Pound loan, what am I liable for?

You are liable to pay the minimum monthly repayments in full as per your agreement.

What’s to stop people ripping off the scheme (taking loans and then disappearing)?

We use a well established and rigorous credit checking service on all applicants to avoid companies who might behave in this way. Operating in a localised network also makes this kind of activity much harder to carry out unnoticed.

If, as someone who has taken out a loan, you have a problem with any businesses not delivering the goods or services you have paid for, you have the same rights as you do when using sterling.

Is this a secured or unsecured loan? Will it be secured against my home or any of my assets?

Loans are unsecured and normally issued based on a standard credit assessment and any supplementary information we may request about your business. At this time we are not issuing loans against assets you hold such as your home.

 

Accounting / reporting

How can I track my loan repayments?

You can track your loan using our online banking service.

Is online reporting available?

Absolutely

How do I use the system to make payments, take orders etc?

We have a simple online tool which allows you to perform most of the functions you’ll have used on other banking systems. This tool can also help you identify suppliers and customers, and help you keep track of your payments.

What support will I receive to use the system?

We can offer help and support with using Bristol Pounds by email or phone, or in person. Please contact us on [email protected] or 0117 929 8642.

Will this work with my accounting software (e.g. Sage / Quickbooks)?

Yes. You can carry on using your usual accounting software to keep track of your spending. Our banking platform allows you to export your transactions to a CSV file for easy integration into your accounting system.

What status does my Bristol Pound loan have in my tax return?

For accounting purposes, we recommend that your Bristol Pound loan be treated as if it was sterling. However, we are not tax advisors, so if you have any doubt about how to treat income or expenses in Bristol Pounds please seek advice from a professional accountant.

As an organisation we are committed to providing statutory information to HMRC on all transactions completed on the Bristol Pound platform.

 

GDPR

How is my data held and protected in line with GDPR?

We will hold your data and process it to undertake due diligence and credit checking in accordance with our data protection policy.

We will share your data with Bristol Credit Union, who underwrite the loan, and will store and process your data in line with the operation of the loan. The Bristol Credit Union will share your information with third party licensed credit agencies. See the full Bristol Credit Union Privacy policy here.