Minister of Finance and the Public Service Audley Shaw on Thursday hailed the $1-billion loan fund launched by National Commercial Bank (NCB) as a needed boost to small and medium size businesses in a challenging credit market.

The NCB loans will be priced at 9.0 per cent.

A week earlier, Scotiabank announced a similar $500-million facility priced at 9.95 per cent.

"The $1 billion fund has come at an opportune time and will serve to further stimulate the small business sector," said Shaw in a statement issued by his office.

"This initiative, coming after a similar initiative announced by the Bank of Nova Scotia, underscores the zeal with which our financial institutions are beginning to recognise and embrace opportunities for small-business financing."

The banks have been under pressure from policymakers and manufacturers to bring down the price of credit, preferably to single digit. The special loan facilities, both of which are non-revolving and will have a seven-year lifespan, are something of a concession to the low-interest lobby.

rates still high

Three banks have, since summer, adjusted prime rates but they remain high. Rates are now being quoted from a low of 19.875 per cent offered by Scotiabank up to 21.75 per cent, while the signal rate from the Bank of Jamaica is at 17 per cent on its benchmark note.

Commercial interest rates are otherwise averaging 13 per cent.

"This is the time for industrious and innovative Jamaicans to unlock their potential by taking advantage of the funds being made available," Shaw said.

"It is imperative that we begin to see small and medium-size businesses as being critical to our economic recovery," he added.

Subscription to the NCB facility opens November and closes April 2010, while Scotiabank applications are open to June 2010.

business@gleanerjm.com