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New $1.8 billion line for SMEs

Published:Tuesday | October 20, 2015 | 8:58 AM
Milverton Reynolds, managing director of Development Bank of Jamaica.

The Development Bank of Jamaica (DBJ) has announced a new $1.86 billion credit line for small and medium enterprises, backed by the World Bank, that can be tapped by companies for expansion projects.

The maximum loan is $30 million, but the DBJ was not willing to speak to the pricing of the funds, which will be distributed via commercial lending institutions.

The target group of borrowers is businesses with up to 50 employees and annual sales in the region of $150 million.

"This DBJ World Bank SME Loan is on-lent to the business at rates determined by the banker and is a solution to limited working capital and local investment challenges," said the state-run

development bank via email.

"Any firm with up to 50 full-time employees and up to $150 million in annual sales is encouraged to contact their banker today."

Simultaneously, the DBJ has also reactivated and doubled the loan guarantee offered under its credit enhancement facility. The partial

guarantee offers up to a maximum of 80 per cent for loans ranging up to $6.25 million and up to 50 per cent for loans ranging up to $15 million.

The loan repayment period under the credit enhancement programme has been extended from five to 10 years for both loans funded by the DBJ and its affiliated financial institutions.

For the World Bank line, repayment will be up to seven years, including a one-year moratorium on principal payments only.

SMEs may secure a maximum ninety per cent of total project funding under the new DBJ-World Bank programme. Commercial banks will submit applications to the DBJ on their clients' behalf.

The DBJ said that projects to considered must be "financially and technically viable" and clients must also have a valid tax compliance certificate.

Money will not be disbursed for the refinancing of debt, nor will it be given for the purchase of real estate and land. The DBJ has also barred

projects that are "illegal under Jamaica country laws, regulations and international conventions", as well as those that are "likely to have significant adverse environmental impacts".