Small Businesses Taking Up Government Loan Facility

The Jamaica Business Development Corporation (JBDC), has said that there is already a high level of interest and positive feedback from the small business community about the recent roll out of the $150 million loan facility instituted by Government for the Micro, Small and Medium Enterprises (MSMEs).
“The interest has been extremely high.up to 200 persons had shown an interest before the programme even rolled out and to date, the take-up has been significant, it has been growing steadily,” Executive Director at the JBDC, Harold Davis said at a JIS ‘Think Tank’ yesterday (Feb. 5).
The loan facility, which came into effect last month, is part of a Government stimulus package for the productive sectors, in light of the global financial crisis. It is an on-lending scheme, which is targeted at agriculture, agro-processing, manufacturing and any other sector that enhances production.
“The loan is for the productive sector, it is not for traders, it is not for refinancing,” the Executive Director stressed, noting that, “it is for working capital, the purchasing of equipment or the acquisition of technical services.”
The loan facility consists of three components: a start-up product that will afford applicants up to $500,000; a micro business product for which applicants can access up to $500,000; and a small business product for existing businesses, which can apply for up to $2.5 million.
He pointed out that 85 per cent of the interested applicants are borrowing less than a million and are mainly from the existing business group.
In terms of the criteria for qualifying for the loan, Mr. Davis outlined that applicants need to show proof of being in a business; the business has to be registered; applicants must possess a Tax Registration Number (TRN); they must provide references if they require financing over $100,000; and complete a business proposal.
The Executive Director informed that resource officers are stationed at the various business information centres island wide, to assist persons in completing the forms and preparing business plans.
“We are aware that persons have difficulty in getting the plans done so we have worked out a mechanism in-house to assist them in completing the plan…we believe that this is critical, especially if they are looking at loans over $500, 000,” Mr. Davis said.
He pointed out that existing businesses need to show how they earn and the kind of expenses they accumulate. “If it is a start-up business, you need to be showing us projections and show us that you have thought through the whole business and not just an idea that has popped into your head,” he said.
The Executive Director informed that the repayment period will begin three months after the loan has been acquired and is repayable up to 48 months, but is determined project by project, and negotiated based on the ability of the business to repay.
“You do not want to have a situation where you have money repaying for longer than you will need to and you do not want the contrary, where the repayment time is so tight that it does not allow for your business’ cash flow to prosper, so we look at it based on that. It is a revolving fund so the more we are able to take back, the more persons can access the facility,” he noted.
According to Mr. Davis, “the product we are offering is not strictly a financing product. It is a new creative financial assistance that will include mandatory technical assistance, so if it is that you are a start up business, it is mandatory for training and after the loan is granted or not, we provide follow up, hand-holding to make sure that the implementation of the project is done.”
The JBDC was established as one of the premier business support organiSations in Jamaica and is mandated to foster the development of MSMEs.