A micro bank is a fund that is available to make small loans to small businesses. The primary purpose of the loan is to support social and economic development goals that would not otherwise be achieved.
The idea of a Micro Bank for KACL Consumers has grown out of a number of circumstances existing over a number of years. These included the following:
1.Opportunities for persons with special needs to enter meaningful and satisfactory very small business have been passed up because of lack of funds to purchase inventory or very minor equipment or other capital requirements.
2.Local banks and LOWBIC have not wanted to become involved with small loans because of claims that costs of administration exceed any possible interest revenue returns on such loans.
3.Ontario provides a Ontario Disability Support Pension (ODSP) of $516 plus a Shelter allowance for persons renting accomodations. This amount has remained virtually unchanged since 1993. ODSP have simply failed to maintain a subsistance income since 1993. Persons with special needs who have employment are able to keep the first $160 and 25% of the next so many dollars. Another way of looking at this is that there is a minimum claw back of 75% of welfare dollars above the first $160.
4.Various obstacles such as the Ministry of Community and Social Services rules relating to cost recovery of a second persons wages makes it almost impossible for a person on ODSP to employ a second person in the business. Hence another individual must nominally own the business and employ the real owner and additional employees. This discourages any incentive for a large profit to made which could fund the inventory or minor capital.
Kacl commenced to purchase inventory for small businesses from its float - especially for seasonal businesses - and the remaining inventory at the end of the season would be charged off against the business. Next it purchased equipment and rented the equipment to small businesses on a purchase price recovery basis. Finally it desires to make small loans to permit small businesses to rent equipment with a option to purchase the equipment at a nominal price once the equipment has been paid.
To date no interest has been charged or proposed. The sole purpose of the loan has been to increase the numbers opportunities for persons with special needs to have meaningful and satisfactory lifestyles.
In the future the Association is hopeful of attracking additional funding from socially minded individuals who appreciate the worthiness of all useful occupations and the benefits of employment for the persons employed in such occupations and businesses
Policy: General Conditions on Micro Bank Loans1.The purpose of the loan is to secure or maintain employment of persons with special needs. 2.A general likelihood that the business will survive during the duration of the loan and that the loan will be repaid. 3.Such other conditions as the Executive Director believes is necessary to achieve the purpose of the Loan or the mission of the Association. 4. Amount of the loan can not increase the total loans beyond the amount of the reserve fixed by the Board. |