Hopeton Morrison, Contributor
A READER writes:
Having read your article (Should I become my own boss? Sunday Gleaner, July 25) I got the feeling as I am sure many others also did that the small business lending organisations mentioned are organisations that would provide advisors to the potential business owner. This would be done to compensate for understandable skills gaps, which of course include (just to name a few) an attorney, accounting professionals, insurance advisors etc.
For certain, this was by no means so. Of greater contention though, is the issue of financing, which seems to be available only to those who are already half-way rich, have command of an entity already and or a PhD, to warrant a loan, it seems, of any size.
After making several calls, I realised that financing would not be available to one such as myself without the above mentioned requirements. You get the impression that anyone with a well-written and viable business plan and idea would at least be allowed a loan interview. This was not so.
I have not been able to contact all of the lending institutions that you mentioned due to a lack of contact numbers, some of which are not available even through directory assistance. Therefore, I may be wrong on some accounts.
My question to you though, and I hope that you will be able to answer this, is: Are there any institutions that provide financing for those who are in the category mentioned? That provide mentorship, among other things of importance necessary for the development of a business entity?
Dear Reader:
You have raised a host of genuine concerns here. In fact, I have taken your letter very seriously and raised your concerns with three experts in the field of micro and small business lending each of whom is the CEO of his respective fund.
We forwarded your letter to Horace Bennett, executive director of COPE Foundation Ltd., Marcus James, founder and manager of Access Financial Services Ltd., and Frank Whylie, general manager of JN Small Business Loans Ltd.
Horace Bennett wrote directly to you and copied us as follows:
"I work for an organisation, COPE Foundation Ltd., that is in the business of supplying micro credit finance. I am not sure you had a chance to contact us as you went about developing your business proposal, so I hope that these few comments will be useful to you and that you will not give up on your proposed business idea.
EXPENSIVE SERVICES
"First of all, I must agree with you that almost no lending organisation (micro, medium or large) is currently providing services such as legal advice, accounting packages, insurance advice or even a structured mentorship/handholding programme for prospective entrepreneurs. These are very expensive to provide, and are usually dealt with on a case-by-case basis by the prospective entrepreneur and the particular loan institution. Nonetheless, I am quite positive that these concerns could be dealt with by an organisation such as the Small Business Development Centre, which is in the business of helping with business plan preparations and I believe would certainly factor these concerns into any business proposal that they deem viable and would recommend for funding.
"Please note however, that they charge a small fee for the preparation of these proposals. Probably also, you could contact the Technology Innovation Centre at UTECH about the Business Incubator project which actually provides office space and other common services for businesses.
"I can speak for COPE that we would be prepared to sit with any individual who has a business idea to see if we are able to assist them. We may not, however, be able to finance them as the following factors would dictate our course of action: Size of loan (under $200,000); duration of loan (20 months); viability of business; and collateral available.
"I hope that somehow this helps.
"If we can be of further assistance, please contact us at 968-1187."
Marcus James of Access sent us the following response:
"Your Reader has raised some interesting questions regarding the challenges that must be overcome by individuals who wish to start their own business. I have summarised his concerns by placing them into the following categories:
Business advisors.
Professional resources.
Financing.
"There are resources available to overcome most, if not all, of the challenges that he listed. For individuals wishing to start their own business I would offer the following suggestions.
ADVISORS
"Depending on the level of education and/or experience of the entrepreneur a business advisor such as Jamaica Business Development Centre should be contacted. Business advisors will offer assistance in the preparation of a business plan, training the entrepreneur in basic book keeping and pricing methodologies, and also provide referrals to professionals such as lawyers and accountants.
"While limited venture capital is available from institutions such as Self-Start Fund and the National Investment Bank of Jamaica, it is easier for the entrepreneur to access funding by starting business with equity and then using debt to finance its expansion.
"Equity to start the business may be obtained through personal savings or from an investment from family or friends.
"Once the business is in operation, working capital support for its expansion may be obtained from a financial institution such as Access Financial Services Ltd. (AFSL). The basic information that is required is as follows:
The entrepreneur must be operating a viable business.
Two passport-size pictures.
TRN.
A valid identification.
Two character reference letters.
Payment history on utility bills.
List of assets that will be used to secure the loan (e.g. household appliances, motor vehicles etc.).
Co-signer or guarantor.
Financial and other information is usually obtained during the interview with a credit officer.
"Contrary to what your reader has indicated, it is not necessary for one to have a PhD or a lot of money to get assistance to start a business.
"At AFSL, the majority of our clients operate micro businesses that are involved in trading, manufacturing, agriculture, or service industries. It should also be noted that most of our clients have not attained education past the high school level and most started business from very humble beginnings.
"AFSL may be reached by calling 754-9253 or visiting one of our branches in Kingston, Morant Bay, Montego Bay or Spanish Town."
CREDIT UNIONS
Frank Whylie of JN Small Business Loans simply stated in his response to us that his organisation provides micro loans ranging in size from $5,000 to $300,000 with the maximum for a first loan being $50,000.
There is a condition that the applicant needs to be in business for at least one year to qualify. In other words, if you are starting a business from scratch you would not qualify.
And while claiming interest here, many of the island's 52 credit unions are also very active in the business of micro and small business financing.
If you live in the Portmore area MIDA's Portmore Community Development Fund (CDF) offers start up financing. Financing is also available from either Scotiabank or National Commercial Bank, both of which offer start-up financing via their small business lending subsidiaries.
Hopeton Morrison is general manager of St. Thomas Co-operative Credit Union Ltd. and lecturer in the School of Business Administration at the University of Technology. Please send comments and questions to:hmorrison@stccu.com.
