EXIM offering 51% project financing under Champion Assist project
Published:Sunday | June 5, 2011 | 12:00 AM
Avia Collinder, Business Writer
Champions Assist, a programme of the National Export-Import Bank Jamaica to pump debt capital into needy small firms in the productive sector, has extended its deadline to June 10 for companies to apply for assistance.
The lending agency will also be encouraging firms that participate in its programme to eventually list on the Jamaican exchange, but says it is not a criterion for participation.
EXIM says it will be able to accommodate 15 small firms in this fiscal year.
Ann Marie Walter-Allen, chief officer for marketing at EXIM, says companies which qualify, after due diligence on their financial status, can access loans of J$2 million to J$5 million at 10 per cent interest, depending on their needs, plus an introduction to an investment partner.
Repayment periods for the loan will depend on each case.
At first designed for companies in the agri-business sector, EXIM widened the pool of potential applicants targeting "viable SMEs which are ready to grow but need additional cash to facilitate growth," the lending agency said in a press statement.
Walter-Allen told Sunday Business that EXIM Bank would not be taking an equity stake in any of these ventures, but would be providing technical advice for the investment process.
She said companies would need to pay for the services of financial analysts and business strategists where these are needed to prepare proposals for investors to view.
In the release, EXIM said companies that wished to participate must "be established, registered businesses located in Jamaica and Jamaican-owned, possess sound management, have a viable project/proposal, have the potential to export or provide goods/services to the exporting sector, be tax compliant, and have a business plan".
Successful applicants will be eligible for loan financing and/or assistance in securing private investment which, when combined, will not exceed 51 per cent of the project costs. SMEs will also receive technical assistance, as well as mentoring from experienced business owners, the EXIM Bank said.
The bank said it was also inviting experienced business persons to participate in the programme in the capacity of 'angel investors' under a mutually agreed financial arrangement between both parties.
"Whatever kind of arrangement they come to, be that it is giving up shares, or issuing bonds, or some other arrangement, is up to the partners," Walter-Allen said.
Pilot phase
The officer said there was hope that the programme would be expanded after the pilot phase.
"This is a loan product, but it also has the added component of private and institutional investment for companies which are ready for growth," she said.
EXIM will pre-approve the companies for the loan, review their structure and financials, and connect them to mentors.
"These are companies which need loans to purchase equipment and for working, but which also need a capital injection which investors will provide. The long-term hope is that they will also be able to go on the stock exchange," Walter-Allen said.
The Jamaica Stock Exchange operates a junior market with tax benefits of up to 10 years for companies which list in that category.
Such companies must have a minimum of 25 shareholders holding at least 20 per cent of the equity share capital within the first five years, and at least 50 shareholders in the following five years.