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Access Financial approved for $30m IDB grant to back green energy loans

Published:Wednesday | July 29, 2015 | 7:00 AM

Access Financial Services was approved for a US$284,000 ($33 million) grant from the Inter-American Development Bank (IDB) to finance its green microfinance -for-clean-and-efficient-energy project.

Access will also put up US$130,000 for the undertaking. The micro-lender aims to use the facility to offer financial products to micro, small and medium-sized enterprises (MSMEs) and low-income households that wish to acquire renewables or energy-saving technology.

The goal is to enable the targeted groups to achieve "better energy cost management for those MSMEs and increase disposable income of low income households", according to project details published by the IDB on its website.

The multilateral lending agency approved the non-reimbursable technical co-operation grant last Thursday. Access CEO Marcus James was not reached for comment.

NationGrowth MicroFinance Limited beat Access to the punch. It already has a green energy loan facility available to small businesses for financing of up to $2 million and a five-year repayment period.

However, companies wishing to access this facility have to present at least two years audited financial statements, among other things. For individuals, a job letter and pay slips are taken to demonstrate ability to repay, but both business owners and householders have to put up collateral to access this loan, which NationGrowth advertises at an interest rate as low as eight per cent a year.

Still, the Development Bank of Jamaica (DBJ) appears to currently dominate the domestic market for energy financing for SMEs in terms of the range of offerings listed on the Jamaica MSME finance online directory at findmsmefinancing.com.jm.

SME OFFERINGS

The government agency offers products ranging from grant funding of up to $200,000 available to SMEs for energy audits to debt financing of up to US$3 million through a PetroCaribe funding facility.

However, SMEs are more likely to access DBJ's regular energy loan, which provides a maximum of $30 million in financing at single-digit rates and up to seven years to repay it. The government agency is willing to fund up to 90 per cent of projects for smaller businesses, while large firms have to put up closer to a third of the project cost.

The DBJ defines SMEs as companies with less than 50 employees and annual sales of $150 million or less.

For households, the DBJ lends up to $2 million, also at single-digit rates. It lists solar water heaters, photovoltaic panels, wind turbines, biodigesters, and energy-saving lighting systems among the items for purchase that it is willing to finance.

camilo.thame@gleanerjm.com