4 weeks ago
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In a reaction to consistent calls by the business community for commercial banks to lower their lending rates, National Commercial Bank Jamaica Limited, NCB, has responded with the launch of $1-billion facility targeted at MSMEs or micro, small and medium-sized enterprises.
Jamaica’s largest commercial bank is also cutting the interest rate on all SME loans by a quarter of one per cent, NCB announced.
The NCB SME Growth Fund will be available from March 31 and will remain open until the full allocation is disbursed.
“Businesses need access to capital at sustainable rates, and NCB is taking decisive action to make that possible. The NCB SME Growth Fund is part of a broader strategy to ensure that more entrepreneurs can invest in their businesses, expand their operations, drive job creation and build long-term success,” said NCB CEO Bruce Bowen.
The NCB SME Growth Fund offers businesses a special interest rate reduction of up to three percent on loans for working capital and capital expenditure projects. Additionally, NCB is applying a 0.25 per cent reduction across all SME loan products, extending the benefits of lower borrowing costs beyond the fund itself.
The average commercial bank lending rate was estimated at 11.31 per cent at the end of January, according to the most recent data from the central bank.
Perrin Gayle, executive vice president in charge of retail banking at NCB, said the loan initiative was the bank’s response to concerns raised by SME advocacy groups, policymakers, and business owners about the cost of borrowing and access to financing. Noting that the Bank of Jamaica has reduced its policy rate four times in the past year, Gayle claimed that NCB was the first financial institution to act on these changes by lowering interest rates on SME loans.
“The conversations about SME financing in Jamaica are not new,” Gayle observed. “We have heard business owners talk about the cost of borrowing, the challenges in accessing loans, and the need for more tailored financial support. This is exactly what this fund is designed to address,” he said.
In a press release regarding the SME fund, NCB said it is available to registered SMEs that meet specific criteria, such as generating annual revenues of $15 million to $425 million, being registered as a business for at least two years, and in operation for a minimum of one year.
The fund supports businesses across key industries, including tourism, agriculture and agro-processing, manufacturing, mining and quarrying, energy and alternative energy solutions, professional services, retail and distribution, and transportation.
The loans will be allocated on a first-come, first-served basis.
Groups representing small businesses have been advocating for months for a lowering of interest rates. In January The MSME Alliance called on the BOJ to intensify its efforts to get commercial banks to reduce their rates. Also, last December the Small Business Association of Jamaica expressed outrage over commercial banks’ refusal to slash their rates despite BOJ’s rate reductions.
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