New MSME loan programme to boost sector

Access to financing just got easier for micro, small and medium sized businesses (MSMEs) in Jamaica. They are now able to access $675 million in additional funding support from the Government, under the new 4.75% MSME Capital and Business Loan Programme. 

The facility, being spearheaded by the Ministry of Industry, Investment and Commerce, is being executed in partnership with the National Export-Import (EXIM) Bank, and Jamaica National Small Business Loans Limited (JNSBL).

State Minister in the Ministry of Industry, Investment and Commerce, Norman Dunn, told Kalilah Reynolds on #MoneyMovesJa that the facility will provide the foundation for MSMEs to succeed. He said it will eliminate the funding challenges usually faced by these businesses.

“An interest rate of 4.75%, I don’t think anybody can beat that…This interest rate component and the payments relating to the principal and the interest rate component will be very small and therefore they [MSMEs] should be able to navigate their economic cycle well and the opportunities that they would have with their businesses to ensure that they can proceed,” he reasoned. 

Who can benefit?

The new loan was first announced by Portfolio minister, Audley Shaw during the 2021/22 budget debate. It was officially launched on June 24.  Any business falling within the MSME category can benefit. Target sectors include service (barbers, hairdressers, nail techs), agriculture, manufacturing (including agro-processing), and tourism linkages.

Minister Dunn said some $200 million, to be managed by JNSBL, has been programmed for micro businesses, which will be able to access between $500,000 and $5 million. Micro businesses refer to those with less than five employees and a turnover of less than $15 million. Their loan will be repayable over 60 months with a one-year moratorium.

EX-IM Bank will focus on small and medium-sized enterprises (SMEs), who will be able to borrow between $5 million and $25 million under similar terms.

Small businesses should employ between 5 and 20 persons and earn between $15 and $75 million per year.

“Businesses generally would not be able to access such loans but we believe in the value proposition of businesses and what MSMEs can contribute to Jamaica,” said Dr. Dunn.

MIDA portfolio transferred

The Minister said funding for the new facility was made possible from the transfer of the portfolio of the Micro Investment Development Agency (MIDA) to EXIM Bank. 

He says all requirements that typically govern the lending of money will apply to the facility.

“All the due diligence will be done by EXIM and JNSBL has a long history of ensuring that their lending practices are in keeping to ensure that persons are fit and proper to borrow and will repay because repayment is an important part of the sustainability of the loan programme,” he said.

“The one year moratorium is to ensure that you can put your house in order and be able to develop a robust platform before you even start paying,” he added.

Strategic support

Meanwhile, Dunn disclosed that MSMEs will also be able to access strategic business support, once they need it, through the Jamaica Business Development Corporation (JBDC) under the loan facility. This, he said, makes the initiative different from others which may have preceded it. 

“It’s not just about lending money but we want to have a supporting side to ensure that businesses that are able to access this can get these services to ensure they are going to be on the right [growth] path,” said Dunn.

Dunn said this support component aims to make the businesses sustainable and grow beyond their current capacities.

The new facility will also allow small businesses to apply for loans using non-traditional assets as collateral.

“It has always been a challenge to small businesses, when they go to borrow money they don’t have the regular collateral whether it be buildings, land, properties etc, but what we’re also doing is leveraging other aspects of the ability to borrow. There’s a thing called SIPA, (Securities Investor Protection Act), that we’re also putting in so people can use their intellectual property in order to borrow,” he said.

To apply for a loan under the new facility, businesses must be registered with the Companies Office of Jamaica (COJ).

Dunn said the government looks forward to the applications, noting that the programme will be reviewed to determine its success. He said if it works, it would mean that a formula has been found to matriculate MSMEs into profitable enterprises.

Visit EXIM Bank’s Business Advisory Service at:
https://eximbankja.com