Last week it was party time in the Metal Cathedral. This 'creative incubator' in the picturesque no man's land between Utrecht and Leidsche Rijn can grow into something that might become great fun for the neighbourhood, but also for people on the other side of town, thanks to a loan from a bank.
The Metal Cathedral is an initiative of two artists. They saw an empty factory building along the river, and saw possibilities. The building turned out to be an ex-church but just not old enough for monument status. Nevertheless, the municipality of Utrecht thought it was cool that they were going to do something with it. The creative duo sold their own house, settled in a caravan and thus raised enough money for the first restoration work.
And now they are almost finished. The underfloor heating for the studios has just been installed, the monumental ceiling has been saved, the roof no longer leaks, and now the rest needs to be finished so that the commercial rental of the property can enter a new phase. Because, of course, it has to be economically viable. After a lot of hard work, they not only have to pay back their own house, but also pay off a hefty loan to the sweetest bank in the Netherlands, because anything Jacob Derwig voices the commercials for can pass as the sweetest business in the world.
Triodos Bank has given money to De Metaalkathedraal, just as they have given money to incubators in Amsterdam, and to Kyteman's crib and the über-hip Vechtclub XL in Utrecht.
Although, given? Triodos is, of course, a bank. And banks don't usually give anything away. So neither does Triodos. Triodos simply has to earn money to pay out to savers and shareholders. That Triodos is a touch nicer than other banks is only a marginal difference.
That marginal difference is that banks in general never ever want to lend money to small independents, and certainly not to artists or - worse - creatives. Creatives are worse than an Icelandic adventure. Creatives are the Greeks of SMEs. Bottomless pits, wrapped in hipster beards and cool logos, they also leave their premises worse off than when they moved in. With expensive coffee stains.
Triodos does lend money to creatives, but to prevent customers from walking away en masse, they take a tough stance: no subsidy applications: they need a solid business plan and expensive collateral. Nothing funny ideas on a beer mat. And because these creatives, despite a fantastic business plan and an insanely beautiful piece of real estate as collateral, still represent more risk than expected profit for the banker, the banker wants help. Help from the municipality, which stands surety for those creatives.
So that's why the Utrecht municipality has deposited 700,000 eurie in an account at Triodos, and they call it a Guarantee Fund. And because there is always a difference between hard cash and what you can freely use of it, the bank can spend 2.8 million on loans. So that €700,000 is there for when one of those creatives proves unable to pay off its loan. The municipality then loses that money, not the bank.
So far, the guarantee fund has not been called upon: of the 30 incubators in which investments have been made, not one has yet fallen over, the bank reported. That's a compliment to the incubators, of course, but also to the people at the bank who assess the risks: the plans submitted must be very secure, not too wild, the property must be or become stable in value, the earning model commercially sound, the operation market-based.
And so there, according to some, is a pain point. The bank runs no risk, but does receive the normal interest on the loan to the creative. The creative, like anyone else with a loan, has to work very hard to pay the interest and repayments (for example, by selling your own house), and if it fails, the creative simply goes bankrupt. The bank wins, the municipality pays for part of the loss.
And that's as far as it goes, so annoying for the cultural sector is that Cultural Affairs of the municipality of Utrecht deposited 350,000 euros into that Triodos account (the other half comes from Economic Affairs). 350,000 euros is quite a lot of money on Cultural Affairs' total budget. You can put a few handfuls of artists to work with that, have ten semi-pro theatrical performances produced and so on. So that 350,000 euros of potential subsidy money is now given to a bank. Who can make a profit from it.
There are people who get itchy from that.
Read here the details
What do you think? Is subsidising a bank the right way to help the arts sector?
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