Pamela McLean, head of the Ex-Im Bank, says loan screening under the NIF would be rigorous but flexible, and that projects will be monitored to reduce credit risk. - File

The National Export Import Bank of Jamaica has got the first tranche of a $100 million drawdown from the National Insurance Fund (NIF), and is ready to start disbursing loans.

But Ex-Im, which will bear much of the credit risk for the loans, is implementing a rigorous screening and monitoring programme to minimise its risk exposure to defaults.

The agency's boss, Pamela McLean, says all applications will be "rigorously assessed, projects will be carefully monitored and adequate collateral will be required", but she softened the warning with the assurance that the lending agency would "exercise flexibility as far as possible."

The drawdown is from the $1 billion programme mandated by Prime Minister Portia Simpson Miller to assist small companies with capital.

The funds, slated for small- and medium-size businesses, are for the acquisition of fixed assets, and may be used as working capital.

Debt refinancing

Kingston-based Ex-Im said it would not finance retail trading nor disburse funds for debt refinancing.

Loans will be capped at $5 million, repayable within four years at interest "not exceeding" 10 per cent on the reducing balance, said McLean.

Eligible applicants include sole proprietors, partnerships, incorporated companies in light manufacturing, services, agro processing and craft. To qualify, the business must be registered to trade and be tax compliant.

"Borrowers are required to have a tax registration number (TRN) and a valid tax compliance certificate (TCC), but the TCC is waived for those who are borrowing $2 million or less," said McLean.

The agency, at the start of the fiscal year, projected loan disbursements of about $80 million under the NIF Loan Scheme.

Turnaround time

The Ex-Im boss said the full drawdown from the NIF - whose accumulated surplus tops $50 billion - will be determined by her agency's turnaround time on loans, saying the "NIF is linking incremental disbursement to each participating financial institution (PFI), based on performance of the individual institution."

But McLean was confident her 20-year-old agency would meet the requirements, saying it already has a good track record.

Last year, Ex-Im disbursed just under $4.5 billion in loans to the productive sector, but plans to better that to $4.7 billion. The additional $260 million is largely attributable to planned increased disbursements under its Modernisation Fund for Exporters.

Ex-Im provides financing for the productive sector, particularly those engaged in exports.

The agency, though predicting a 28 per cent or $98 million increase in revenues this year to $453 million, anticipates a steep drop in profits by $21 million or 33 per cent to just under $43 million.

The agency's profits last year were a projected $64 million.

business@gleanerjm.com