Wednesday 20 November, 2019

DBJ, Sagicor sign agreement for redesigned Credit Enhancement Facility

Sagicor Bank CEO Chorvelle Johnson Cunningham (second left) and Development Bank of Jamaica (DBJ) Managing Director Milverton Reynolds (third left) sign their respective copies of a new partnership agreement between the two entities for DBJ’s redesigned Credit Enhancement Facility. Looking on are Sagicor Bank Head of SME Banking Howard Smith (left) and DBJ Project Coordinator for the Access to Finance Project Hugh Grant (right).

Sagicor Bank CEO Chorvelle Johnson Cunningham (second left) and Development Bank of Jamaica (DBJ) Managing Director Milverton Reynolds (third left) sign their respective copies of a new partnership agreement between the two entities for DBJ’s redesigned Credit Enhancement Facility. Looking on are Sagicor Bank Head of SME Banking Howard Smith (left) and DBJ Project Coordinator for the Access to Finance Project Hugh Grant (right).

The Development Bank of Jamaica (DBJ) and Sagicor Bank on Thursday signed a partnership agreement for DBJ’s redesigned Credit Enhancement Facility (CEF).

This signing, done by DBJ Managing Director Milverton Reynolds and Sagicor Bank CEO Chorvelle Johnson Cunningham, makes Sagicor Bank the first financial institution to participate in the improved CEF.

The CEF is a partial loan guarantee that helps micro, small and medium-sized enterprises (MSMEs) without enough collateral to access loans from financial institutions.

DBJ has now redesigned the CEF to better support its lending partners – the Approved Financial Institutions (AFIs) and Micro Finance Institutions (MFIs) – in serving the MSME sector.

“I would really like to commend and congratulate Sagicor for being the very first of the DBJ’s AFIs to sign up. This is a clear demonstration, in a very tangible way, of their commitment and support in making financing accessible to the MSME sector,” said Reynolds.

“We truly believe that the new, improved Credit Enhancement Facility will be a game changer in making credit available to MSMEs, so I am encouraging all our AFIs to come on board and sign up,” he added.

The CEF is available to viable enterprises and projects in the productive sector that earn less than $425 million in revenue per annum, are tax compliant and have good credit history. It supplements existing collateral, allows MSMEs to access credit for expansion and reduces the risk for the AFIs and MFIs who are lending.

 Sagicor Bank’s Vice-President of Corporate, Retail and SME Banking Michael Willacy, who referred to the new CEF as a dream come true, said, “Banks will much more readily extend credit knowing very well that the Development Bank of Jamaica is there to support and lend a hand. So I congratulate the Development Bank of Jamaica, which, I think, is extremely forward thinking.”

Since its inception in 2009, the CEF has facilitated loans for 568 MSMEs, totaling $7.82 billion, with a 2,266 new jobs created to date. The improved facility enables AFIs and MFIs to accept non-traditional collateral and grant coverage based on the borrower’s character and the future cash flow of the business.

The CEF will also be administered through an automated, electronic management information system to facilitate real-time approvals, speedy claims settlements as well as simplify administration and reporting by lending institutions.

Speaking at the signing at Sagicor Bank Head Office in Kingston, DBJ Legal Officer Matthieu Beckford said, “The CEF marks a first for Jamaica and it is going to put DBJ [in a position to become] the leading development bank, not only in the Caribbean, but also in Latin America.”

The CEF is part of DBJ’s holistic business ecosystem to support economic growth and development in Jamaica, which also includes vouchers for technical assistance, a venture capital programme and loans to MSMEs for start-up and expansion. The DBJ falls under the purview of the Ministry of Economic Growth and Job Creation, and is the lead development financing organisation in the country, with a core focus of providing financing options to entrepreneurs through all phases of development and the business life cycle.

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