The Insured Capital lending solution is ideal for individuals, corporate entities and trusts who are risk averse and do not require monthly interest income, but are looking to grow their wealth base through compounding of interest, but also require certainty that their capital will be repaid by the fifth anniversary of the loan advance.
The Insured Capital lending solution is utilised to fund Community Schemes with arrear levy debtor problems, where a portion of unit owners have not paid their levies. BC Funding Solutions insures the lender’s capital, against non-payment at the end of the fifth year of the loan advance.
INSURED CAPITAL LENDING SOLUTION FEATURES:
Prime plus 3.0% per annum, compounded monthly. Interest is capped at 18.0% per annum, compounded monthly, due to legislative and industry restrictions imposed on interest chargeable to levy debtors.
Interest is capitalised and repaid “as and when” the Community Scheme collects its arrear levies.
Loans are generally repaid “as and when” the Community Scheme collects its arrear levies, typically within an average of five years. Capital is, however, insured through Hollard Insurance Ltd for repayment on the fifth anniversary of the loan advance.
Underlying legislation and security
The Sectional Titles Schemes Management Act 8 of 2011, the Sectional Titles Act 95 of 1986, and the Community Schemes Ombud Service Act 9 of 2011, including important case law.
Loans to Community Schemes are illiquid. The secondary market for this asset class is, however, well established and sales can be facilitated by BC Funding Solutions to willing buyers.
Fees and charges
None, as all fees and charges are paid by the debtor.