Dionne Rose, Business Reporter

Veira, head of the JBDC.

The $1 billion-loan fund that was initially fought in Parliament as a misdirection of pension fund assets has failed to excite the group it was meant to help - small businesses.

Close to 60 per cent of the fund remains untapped, forcing the ministry of labour to seek help in bringing new life to the lending programme that was funded from National Insurance Fund (NIF) assets.

Borrowers were eligible for loans of up to $5 million at 10 per cent per annum, distributed through a network of approved financial institutions, for repayment over four years.

Handing over

Labour Minister Pearnel Charles who reported that only 42 per cent or $423.3 million had been disbursed to small and micro companies, leaving $576 million in the kitty, says he will be handing over the administration of the loan fund to the ministry of industry, investment and commerce, which, this year is handling financing programmes valued at a combined $5.5 billion.

Charles on Tuesday said he was confident that Karl Samuda's ministry would do a better job of managing the funds.

"Samuda has expressed great interest to give it to those who are calling for it every day," he told Wednesday Business.

The labour minister also confirmed previous Gleaner reports that most of the intended beneficiaries were not meeting the minimum requirements to take up the loan.

"I think there were some collateral problems and I think the state of the economy was one (factor)," he said. "People were not too excited about becoming entrepreneurs and they are more excited now."

Companies wishing to tap credit from the $1 billion fund had to be registered to trade, be tax compliant, have a tax-registration number and a valid tax-compliance certificate (TCC). The TCC is, however, waived for those who are borrowing $2 million or less.

Charles said that 53 businesses, owned by women, have accessed the funds, and 320 full-time jobs have been created, while more than 1,500 existing jobs have been sustained.

Samuda, in his Sectoral Debate presentation, gave a strong signal that small-business financing would be a priority for his ministry, announcing that the Jamaica Business Develop-ment Centre (JBDC) would become a 'financial incubator' that advises a special group of "un-banked" micro and small businesses, a reference to their lack of access to commercial credit in the formal banking system.

"The JBDC will be applying creative lending methodologies and will not be taking the traditional collateral," said Samuda. "This special credit window integrates lending with business-development services."

Such companies, he said, would be offered credit at 10 per cent through the JBDC, which would on-lend funds accessed from the NIF loan fund and Development Bank of Jamaica (DBJ).

Not competing

Valerie Veira, head of the JBDC, told Wednesday Business that her agency had applied to DBJ for approval as an AFI.

"Through JBDC, we will be providing what we call jump-start incubator funding to those micro- and small-productive sectors, businesses that are viable, "she said. "We are not setting up a bank, we are not competing with what is there already. We are complementing and the concept is that the client will graduate once they are established enough."

Veira said the agency would begin loan disbursements, capped at $500,000, to start up businesses by July.

dionne.rose@gleanerjm.com