Local Council Borrowing

Local Councils wishing to borrow money for capital projects for a period of more than 6 months and for not less than £5 multiplied by the number of their electorate, have to apply to the Secretary of State for permission to borrow.

Applications for borrowing are administered in the first instance by ChALC and councils wishing to start the process are asked to contact Nikki Hewitt at ChALC for advice. This is the process to follow whether the council is in ChALC membership or not.

There is an application form to be completed and accompanying guidance on what is expected. Please note the Ministry for Housing, Communities and Local Government (MHCLG) do not accept applications directly – a signed hard copy must be submitted to Nikki Hewitt at ChALC who will check and process the completed application form for you.

A checklist, MHCLG application form and guide to borrowing can be found in one document here

The amount that an individual council will be authorised to borrow is normally limited to a maximum of £500,000 for a single purpose in any financial year. A council can go to a number of sources to apply for a loan.

Minor local authorities such as town and parish councils may borrow from the Public Works Loan Board (PWLB). Town and parish councils need a borrowing approval from the Ministry of Housing, Communities and Local Government (MHCLG) in order to borrow. The PWLB lending facility is operated by the UK Debt Management Office (DMO) on behalf of HM Treasury. Any local council wishing to borrow via PWLB should check out the website for interest rates and availability.

Remember – NO borrowing of longer than 12 months can be undertaken without prior permission – no matter what the lending source is.

Below are some useful tips and guidance on borrowing from MHCLG:

Borrowing Approval Hints & Tips Note
DCLG Power point presentation on borrowing
Evidence Requirement Takeaway Notes
Template – General Project Consultation
Template Example – Cash Flow Forecast Table