Industry and Commerce Minister Reiterates Call for Banks to be More Flexible with Lending Requirements for MSMEs
Minister of Industry, Commerce, Agriculture and Fisheries, Hon. Karl Samuda has reiterated his call for financial lending institutions to make changes to the way they assess loan applications from Micro, Small and Medium Sized Entities (MSME’s).
Minister Samuda, who was speaking at the opening of the Caribbean MSME Conference at the Hilton Rose Hall in Montego Bay, St. James on Thursday, said it is critical for lending institutions to consider character, management, experience, track record and other intangibles in addition to traditional forms of collateral in assessing loan applications.
The Industry and Commerce Minister further said intangibles such as a company’s business plan, marketing and transport strategies are better indicators of the potential success of the business than traditional forms of collateral.
“These are the things that must weigh heavily in assessing whether a person is worthy of being entrusted with your cash. In the final analysis you don’t entrust your cash to buildings or equipment, you entrust your cash to the leadership of that organization. When the banks begin to assess not the equipment, but the intangibles, the things that make an industry move… when they start to apply the appropriate weighting then we can say as a small business sector that we are on the right path,” said Minister Samuda.
Minister Samuda’s comments follow a previous call for banks to be more flexible in their collateral requirements for small businesses and to lower the interest rates charged to MSMEs.
Meanwhile, Minister Samuda has hailed the inaugural staging of the Caribbean MSME Conference as a success.
“I am happy with what I see and it is a good start for a process whose time has come. Unless we as CARICOM people get together and decide to work together and share experiences, technology, training techniques, marketing strategies and logistics, we will remain in our own little cocoons and wonder why we are not progressing,” said Minister Samuda .
The conference, which was staged by the Small Business Association of Jamaica in association with the Ministry of Industry, Commerce, Agriculture and Fisheries, brought together private and public sector stakeholders across the region to discuss trade, finance and policy issues.
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