New loan window for SME exporters
Published:Friday | June 4, 2021 | 12:13 AM
JMMB Bank has partnered with EXIM Bank on a $150-million loan window for small to medium-sized businesses, or SMEs, involved in exports.
It adds to a separate US$35-million facility funded by the Inter-American Development Bank that is also available to small companies at JMMB Bank, said CEO Jerome Smalling.
The partnership with EXIM Bank will “further facilitate SMEs and enable them to access more affordable financing solutions and to access funds even in the absence of collateral, which will give these SMEs the financial space to take advantage of opportunities to grow and scale business operations,” Smalling said at the launch on Wednesday.
The funds will finance working capital needs, and will be lent at rates ranging from about 8.5 per cent to 10 per cent, said Smalling. EXIM Bank will guarantee up to 80 per cent of the loan for a fee of two per cent of the value, said EXIM’s Managing Director Lisa Bell.
“This guarantee programme provides support in their ability to access financing. We know exporters need working capital to either purchase raw materials or for other short-term trade financing needs,” said Bell. “The fundamentals are there. It is just a matter of stepping forward.” she said.
Speaking at the launch, Minister of Industry, Investment and Commerce Audley Shaw used the opportunity to urge SMEs to become a part of the formal business sector. It’s estimated that the size of Jamaica’s informal economy is around 40 per cent.
Shaw said those businesses that operate in the informal space often find themselves at a disadvantage when they need to access affordable capital, such as the current $150m loan window and other funding support from EXIM Bank and the Development Bank of Jamaica. They tend to end up at the mercy of loan agencies, paying unsustainable interest rates of 20 to 30 per cent, with bad consequences, he said.
“A lot of things flow from it. Apart from a lack of profitability, there is also the question of lack of productivity, lack of efficiency and a lack of high-quality output,” the minister added.
He adds that additional funds are available to SMEs, citing a pool of $5 billion through the DBJ, and the $600 million generated from the wind-up of Micro Investment Development Agency that EXIM will be in charge of administering.
“Get formal so that you can get loan money at less than 10 per cent, instead of paying 20 or 30 per cent. This will give you a chance to be more productive and creative. Ultimately, there will be able to identify opportunities both on the local and export markets,” Shaw urged.