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PanJam takes stake in start-up microfinance venture

Published:Wednesday | April 4, 2018 | 12:00 AMSteven Jackson/Senior Business Reporter
Joanna Banks, vice-president at PanJam Investment Limited.

PanJam Investment Limited has taken a 20 per cent stake in Term Finance Jamaica Limited, the local subsidiary of a regional microfinancing outfit that entered Jamaica last September.

The terms of the transaction between PanJam and Term Finance Holdings Limited were not disclosed. The latter company retains the other 80 per cent of Term Finance Jamaica.

"Although Term Finance (Jamaica) began operating in 2017, it is still in the start-up phase. We expect loan book growth during 2018 as we ramp up our engagement with the public," said PanJam's Vice-President of New Business Development and Strategy, Joanna Banks, in response to Financial Gleaner queries.

Term Finance aims to differentiate itself from competitors by operating totally online, thereby cutting down on costs associated with setting up and operating a branch network.

"Term Finance (Jamaica) will deliver its service through a completely Web-based platform. This means that borrowers can apply from their smartphones or personal computers," said Banks, adding that agents are on call for assistance.

Term Finance Holdings operates online in six Caribbean markets as well as Costa Rica, according to its website. In each of the territories, the microlender offers loans with full repayment over three month periods and beyond.

In Jamaica, Term Finance's three-month loan is currently priced below 10 per cent for the period, while in all the other territories that same loan comes with quarterly interest of close to 12 per cent, according to its website. Quoted on an annual basis, the loan rates would amount to more than 39 per cent and about 48 per cent, respectively.

"Interest rates will be based on our unique credit algorithm and are clearly stated when using our interactive loan calculator on our website," said CEO of Term Finance Jamaica Oliver Sabga, via email.

Furthermore, Sabga said his customers will never be faced with any additional charges or fees, and that Term Finance's entire end-to-end lending process is completely transparent, as customers are kept fully informed throughout the application process.

"We see this level of transparency as a positive step in the direction of promoting simple financial education in the credit market," he added.

Term Finance Jamaica disbursed its first loan four hours after starting online last November. Sabga said the speed in approving loans is due to the credit scoring of applicants.

"We apply algorithms that enable us to make credit decisions much quicker than legacy, shopfront lenders. Additionally, we utilise proprietary systems and technology that help keep our costs low. Our goal is to pass the savings on to our customers by offering lower interest rates and absolutely no additional charges or fees," he said.