Development Bank of Jamaica (DBJ) has guaranteed loans for 132 small and medium enterprises over the last four years under its Credit Enhancement Facility (CEF) created as a backstop for companies with limited collateral.
The facility provides guarantees of up to J$10 million or 50 per cent of the loan amount for general SME loans, and up to 80 per cent for energy loans.
Since August 2009, DBJ has provided J$213 million of guarantees for loans totalling J$388 million, according to DBJ Managing Director Milverton Reynolds.
"The CEF is a dedicated pool of funds set aside by the DBJ through which it helps small and medium-sized enterprises that have sound projects but inadequate collateral to access loans from banks and other DBJ-approved lenders," Reynolds said.
Other information provided by the DBJ indicates that eligible companies must have assets of less than US$250,000, excluding real estate, and annual sales below US$4 million. They must also have fewer than 250 employees.
Companies may access loan guarantees under the CEF if the borrower is both viable and tax compliant, has "a proven track record and a good credit history," the bank said.
The CEF can be tapped for loans from the DBJ as well as DBJ funds issued through the bank's retail network of affiliated financial institutions or AFIs.
Reynolds said last Thursday that the loan collateral facility is also available to borrowers who tap the new pool of credit provided by the National Insurance Fund for loans to SMEs.
Under the new NIF credit line, companies can borrow up to J$15 million at 10 per cent interest repayable in seven years.
Additionally, the CEF is available to SMEs that borrow non-DBJ loan funds through the AFIs.
"However, when the AFIs are using their own funds, a lower guarantee limit of J$5 million applies," the bank said Monday. The guarantee for DBJ loans is capped at J$10 million.
The CEF guarantee cannot be used for the refinancing of existing loans, DBJ said.