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Loans and Grants Policy - Guidelines for Assistance

Introduction

This paper provides guidance, which can be applied to requests for financial assistance from the AAF Company.

The Board of Directors of the AAF Company (the Trustee) may, in appropriate circumstances diverge from the guidelines and financial limits set out in this paper.

Funding of any type will not normally be provided for areas that are an appropriate charge against the Commonwealth.

Grants

The AAF Company receives requests for grants for specific purposes. A grant is the advancement of monies with no requirement to make any form of repayment in support of a single purpose amenity.

Grants should only be provided in cases where there is a need which cannot be met from other sources and the assessed benefits accruing to Army members are sufficient to justify the expenditure. Grants must be kept to a reasonable level, as they may become a substantial drain on the Company's liquid assets and therefore, future earning ability.

Grants should only be approved once it is determined that the recipient does not have the capacity to repay a loan of any type.

Eligibility Criteria

The AAF Company may provide grants to ARA and Tri-Service entities for the provision of recreational amenities to Army members and their dependants or for other worthwhile purposes. In normal circumstances, entities seeking grants will provide sufficient detail to satisfy the Trustee that they are a 'viable entity'. Other applicants will demonstrate that the loan will provide a tangible benefit to Army members and dependants.

Applicants will be measured against the following criteria:

• Grants should only be provided to entities that have no access to other avenues of funding within the ADF;
• Grants should normally be made to entities which have 'wide' appeal (e.g., entities with a large participation base, ARA areas hosting Inter service sport etc) or to applicants who demonstrate that the loan will provide a tangible benefit to Army members and dependants;
• Grants will be made in preference to a loan where the recipient is able to demonstrate that loan repayments will jeopardise the financial viability of the entity or dramatically reduce the services provided to its members; and
• Grants to entities who, as a result of the provision of funds, provide an improved and/or new amenity to a large participation base will be preferred.

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Loans

The AAF Company may provide interest free and low interest loans to ARA and Tri-Service entities for the provision of recreational amenities to ARA members and their dependants or for other worthwhile purposes. The type of loan approved will depend on the amount of money required, the borrower's capacity to service the loan and the effect of the loan on the Company's finances in both the short and long term and consequently on its ability to meet its commitments to all members of the Army.

Loans for any worthwhile purpose will be considered by the Trustee however, all applications will be assessed against the eligibility and defining criteria for funding assistance (see below). In broad terms, applications in the first instance should include:

• A business case for the loan application including:
  
  
  • the level of assistance required;
  • the level of financial contribution by the entity;
  • approaches made to other funding sources; and
  • an indication of the numbers of members that will benefit from the funding assistance.
    
    
• An indication of the capacity of the entity to meet loan repayments.
• Copies of the entity's financial statements.

Eligibility Criteria

The following eligibility criteria for AAF Company loans will be adopted:

• Loans are normally made to ARA and Tri-Service entities, which have 'wide', appeal (entities with a large participation base or for works that will result in an ongoing benefit to members).
• Loans to entities who, as a result of the provision of funds, provide an improved and/or new amenity to a large participation base will be preferred.
• As the AAF Co has a limited income base, entities demonstrating sound business practices and a proven ability to meet repayments are likely to be preferred

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Loan Conditions

The loan, if approved, will be offered under the terms and conditions set by the Trustee, including:

• the rate and frequency of repayments,
• the interest rate to apply, and
• any other condition deemed necessary by the Trustee.

All loans must be formally documented and appropriate security must be arranged. The appropriate type of loan and the form of security required will be determined in each instance by the Trustee when considering loan applications.

Interest

The interest rate applied to any interest-bearing loan is to be two percent below the Commonwealth Bank Corporate Loan Reference, with the proviso that this rate does not reduce below the rate of inflation.

Principal Plus Interest Loans

Loans approved to most income generating organisations (such as messes, unit and area funds and holiday resorts) will be repayable by instalments of principal plus interest. The Trustee will initially designate the repayment period after careful consideration of the financial status of the entity.

Interest Free Loans

The AAF Company will provide limited financial assistance by way of interest free loans to messes of new or re-raised units, and additionally, provide grants including the return of funds held in trust in the Messes Trust Fund by the Company to units which have been re-raised.

Interest free loans may also be made available on a fixed, short-term basis for amenity purposes where it is not appropriate to require interest repayments. Loans of this type may be appropriate for bodies, which have low revenue producing capacity.

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Funds Availability

A maximum of 50% of the return on LIQUID ASSETS is to be made available for loans/grants in any one financial year. Underspends will not transfer to the next financial year. The Board will determine the sum allocated.

Funding for New Resorts

Funding for new resorts will only be provided when AAF Company is to be the sole owner or is to be in partnership with another entity/entities which jointly fund the acquisitions.

Enquiries

Can be made to:

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