A fifth of the estimated 460,000 micro entrepreneurs in Jamaica don’t have a relationship with a financial institution.
That makes them unable to access loans, diminishing their contribution to the economy, according to Phillip Bernard, general manager of JN Small Business Loans Limited (JNSBL).“Our surveys reveal that there are some 180,000 micro entrepreneurs who want to acquire funds at reasonable interest rates, and favourable terms of re-payment; however, many do not meet the collateral requirements for loans,” he said. “Because most of them do not have a sufficient asset base; and, many financial institutions are averse to disbursing loans for start-ups, because of the high risk.”Many micro entrepreneurs, especially the younger ones, don’t own assets such as real estate, motor vehicles and savings that are traditionally required to secure loans.But the soon to be enacted Secured Transactions Act will broaden the collateral requirements to include appliances and business equipment.Bernard also reckoned that the availability of credit scores, through credit bureau under the Credit Reporting Act will make it easier for business owners to secure loans.Furthermore, financial institutions reject good lending prospects because there’s no information about the businesses.“Most micro entrepreneurs don’t have reports and comprehensive business plans; therefore minimal data is available for financial institutions to fully understand the scope of their business, hence their applications are often rejected,” he said.There are many entrepreneurs with great ideas who simply need people and organisations who believe in them and are willing to provide support, hence the facility (IsupportJamaica.com) that will hone those ideas into successful businesses.IsupportJamaica.com, the first crowd-funding web site owned and operated in the English-speaking Caribbean.The site went live last Saturday, giving individuals a chance to donate to philanthropic projects featured on the site.But this is the first of the two- phased launch of the partnership between the global portal and the JN Foundation.By September persons will also have the option of lending funds to entrepreneurs to realise their dreams, they can contribute by using credit card.View the original article here
"Collateral, perceived risk still barriers for micro businesses"
