- The increase is due to the positive performance of the facility
- The expiration date for the facility is being moved from April 2015, to April 2018
- The funds will be accessible through various participating institutions
The Government is increasing the National Insurance Fund (NIF) Small and Medium Enterprise (SME) credit facility from $1 billion to $1.5 billion.
Labour and Social Security Minister, Hon. Derrick Kellier, made the announcement September 4, at a press conference at Jamaica House.
Mr. Kellier said the increase is due to the positive performance of the facility, with entrepreneurs having generated significant employment, and made a valuable contribution to the country’s overall economic development, since its inception in 2006.
He also announced that the expiration date for the facility is being moved from April 2015, to April 2018. The extension, he said, is “in the certain knowledge that this will increase job creation, grow businesses, stimulate entrepreneurial access to working capital, and embolden community development, and by extension, that of the nation”.
Mr. Kellier noted that the funds will be accessible through various participating institutions, which have over the years, been committed to working with the Ministry and the NIF, in ensuring the success of the credit facility.
Meanwhile, Managing Director of the Development Bank of Jamaica (DBJ), Milverton Reynolds, noted that in addition to creating jobs, many of the borrowers use their loans to make their operations more efficient and competitive.
He pointed out also that many of the beneficiaries will be able to access loans at single digit rates, although the interest cap for onlending is 10 per cent.
The Managing Director also noted that while each financial institution will use their own criteria to assess applications, the DBJ has put in place a credit enhancement facility, which will allow even more small businesses to access loans.
“If a particular loan application comes in, and when it is assessed, it is seen to be viable, but there may be not sufficient collateral, we are prepared to guarantee up to $10 million for each loan, or 50 per cent of whatever the loan is…so that, in a way, is also making it easier for the small and medium size sector to access financing,” he explained.
Mr. Reynolds said there has, in fact, been a significant take up of this facility in recent times.
Since 2006, the NIF SME credit facility has disbursed some $931.69 million, through 12 participating financial institutions.
The loans were primarily used for job creation among seven sectors, including, agriculture, agro-processing, manufacturing, manufacturing services, services, trading, and work study. The agricultural sector received the major share of the disbursements (33 per cent), enabling some 4,225 jobs to either have been created or maintained.