Small Enterprises to Access up to $5 Million Under Revolving Loan Fund

Micro, small and medium size enterprises will be able to access up to $5 million for working capital and to purchase fixed assets, under the $1 billion loan facility for the sector, which has been established by government.
The revolving credit facility, which was announced by Prime Minister Portia Simpson Miller in her Budget presentation in May, is being financed through the National Insurance Fund (NIF), and the loans would be provided through an existing network of public and private sector financial institutions, referred to as Participating Financial Intermediaries (PFI).
According to a Ministry Paper tabled in the House of Representatives on Tuesday (Sept. 26) by Minister of Labour and Social Security, Derrick Kellier, the credit facility is targeted at small and medium enterprises, which are involved in valued-added activities. A micro enterprise must have up to four employees; small businesses up to 10 employees; and medium size enterprises up to 50 employees.
Loan repayment terms will not exceed 48 months and the PFI is expected to extend a six-month moratorium on principal to the entrepreneur or enterprise. Fees charged to the entrepreneur/enterprise should be directly related to legal expenses, for example, the stamping of documents.
All loans will be guaranteed by the assignment of receivables as collaterals.
This requirement will be stated in the overall loan agreement to each PFI and in subsequent promissory notes for each loan disbursed to the PFI, the Paper further cited, explaining that the interest of the facility will be further protected as all PFI’s will be required to establish special bank accounts to which the NIF will have legal access.
Meanwhile, the beneficiary enterprises would be required to meet certain conditions, which will ensure that they function within the formal economy.
“Enterprises should be registered at a minimum as a sole trader. In the event they are not registered, there should be evidence that they have begun the process to formalise the business within a two month period,” the Paper noted.
The enterprise or entrepreneur must have a Tax Registration Number (TRN) and National Insurance Scheme (NIS) number, while directors and mangers must have individual TRNs. In the event of an application for over $2 million, the enterprise must have a current Tax Compliance Certificate.
The Ministry Paper indicated that “it is expected that loans will be made to existing enterprises, which have an established performance history. However, loans can be made to new initiatives in the event that the entrepreneur has submitted an acceptable business proposal/plan; that there are clearly established markets for the goods or services to be generated by the enterprise; the entrepreneur has prior experience in the business she/he wishes to pursue; and there is evidence that the entrepreneur has received some level of business management training from an approved business development service provider.”
Under the facility, an entrepreneur/enterprise can access a second loan in the event that she/he has repaid in full, an existing loan. In addition, an entrepreneur/enterprise can combine this loan with a loan from another facility providing the enterprise has the capacity to repay both loans.
The credit facility is not intended to refinance existing loans, the Ministry Paper noted, indicating that while a portion of the loan can be made for physical repairs, loans should not be used for the acquisition of real estate.
According to the Ministry Paper, the loan facility is initially for five years with built in reviews and impact assessments to guide further programmes and policy decisions.
“The NIF credit facility is well-timed to support the development of small and medium firms, increase job opportunities for individuals with a range of skill levels and impact directly on community development,” the document said.