JMMB Bank Adds US$20 Million to its SME Lending Pool | Business

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JMMB Bank has entered into a US$20 million loan agreement with Development Finance Institute Canada, or FinDev, the first in a series of financing initiatives the bank will undertake this year to increase lending to entrepreneurs operating small and medium enterprises.

The rate at which JMMB Bank will on-lend the funds will be determined by the risk profile of individual borrowers, said JMMB Bank CEO Jerome Smalling. However, Smalling said the bank will seek to lend in accordance with its “competitive and affordable positioning” in the market.

Across the commercial banking sector, the most recent data compiled by the central bank puts the average commercial lending rate at 9.37% in November 2021. However, bank credit is generally more expensive for SMEs than for small businesses. large companies.

Its targeted focus on the SME market dates back to 2019, when the bank launched its SME Resource Centers in Jamaica and then Trinidad and Tobago, while expanding its range of financial solutions and processes to better serve clients. SME customers.

In 2021, JMMB secured deals worth US$68 million for deployment in SMEs, through partnerships with financing institutions like the Development Bank of Jamaica, the National Bank of Import- Export Jamaica and IDB Invest, a branch of the Inter-American Development Bank.

FinDev funding, which JMMB Bank says has no predetermined limit, can be used for COVID-19 recovery purposes, to facilitate business expansion, working capital support and consolidation debt.

“SMEs add significant value to the country’s gross domestic product through production and employment, while this sector receives a small percentage of funding…JMMB Bank sees this as an opportunity to deliberately serve this segment,” Smalling told the financial gleaner.

In Jamaica, studies indicate that 40% of businesses consider access to finance to be a major constraint and that only 27% of businesses have received a loan or line of credit from a financial institution, although below the averages of other Latin American countries. and Caribbean economies.

Over the past few years, JMMB and other commercial banks have actively sought business in this market segment to rekindle lending growth.

Among their target of the broader SME market, particular attention was given to women-led businesses.

A study commissioned by the Development Bank of Jamaica in 2019 found that the Jamaican micro and small business sector was dominated by women and that micro businesses were largely started by women with a secondary education.

JMMB Bank will release 30% or $6 million of FinDev funds to lend to women entrepreneurs. But her interest in this segment dates back to 2017 when she launched a gender-based lending initiative called “Her Wealth”, a year after receiving her commercial banking license.

Currently, women-led businesses make up 34% of JMMB Bank’s loan portfolio.

Prior to its partnership with FinDev, JMMB Bank signed an agreement with IDB Invest in 2021 that allowed the financial institution to lend 20% of funds, or a $7 million loan, to women entrepreneurs.

FinDev’s arrangement with JMMB Bank marks the Canadian institution’s first transaction in the Caribbean.

JMMB Bank will repay the loan over a period of five years.

Paulo Martelli, vice president and chief investment officer of FinDev Canada, predicts the loan agreement will give Jamaican SMEs seeking capital a “significant boost” to grow their businesses and retain or create local jobs.

“This loan represents another example of our COVID recovery strategy to provide capital resources to financial institutions so they can directly fund businesses in the markets they know best,” Martelli said.

karena.bennett@gleanerjm.com

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