Bournemouth Council wants to start a "Bank of Bournemouth" to lend money to businesses and homebuyers.

The council would use £15m of its unallocated capital reserves to set up a Community Finance Company offering business loans and mortgages to local people, if plans are approved by Cabinet next week. 

The yet-to-be-named company would be wholly owned by Bournemouth Council.

A pilot could start later this year, with business loans offered from November, and the first mortgage approved in January 2014. The pilot will run until March 2015.

The council says up to 200 business loans are expected to be made available, at a value up to £10,000 each, and offered at a rate of around 16 per month from November.

Then from January, the scheme would finance 50-75 entry-level mortgages, approved at a rate of around four per month, at between £100-£150,000 each. They will be offered to local people with a proven ability to repay.

Cllr John Beesley, Leader of the Council, said, “This highly innovative initiative directly supports the Council's regeneration and housing agendas. Specifically, we expect mortgage activity to prioritise lending that will support our Backing Boscombe and Town Centre regeneration commitments.

“This is because we believe that having a settled resident population with firm roots in an area has many benefits, including increased civic pride & engagement, reduced anti-social behaviour, and a better skilled & available workforce.”

Cllr Beesley continued, “In terms of businesses, Bournemouth has a growing and highly skilled creative industries sector, and, whilst not exclusively, we will particularly be looking to support growth in these companies through our loans scheme.”

Liz Wilkinson, Executive Director for Finance said: “I am delighted to be involved in what is an extremely exciting initiative for the town. The community finance company will present real opportunities and we are working hard to make that happen, reporting back to Cabinet in autumn on our progress.”

The council says setting up as a company means the operation can be run commercially and so generate trading surpluses that can be returned to the council.

The Community Finance Company is required to apply for and secure a banking licence, which will also allow it to provide bank accounts, and mortgages offered on fixed rates. 

More details as we get them