National Commercial Bank of Jamaica, which lays claim to the largest slice of small business client, is coming to market with a concessionary loan that tops the facility launched by its closest rival more than a week ago.

NCB has created a $1-billion fund priced at 9.0 per cent, a larger pool than the half-a-billion loan window opened by Scotiabank Jamaica, which is selling its funds at 9.95 per cent.

Outstanding SME clients

NCB Group Managing Director Patrick Hylton was to have announced the $1-billion facility last night, said well-placed sources, at the bank's Nation Builders Awards ceremony, which recognises its outstanding SME clients.

Wednesday Business also learned that loan applications for the facility will open November 1 and close April 2010, with special consideration to be given to the bank's customers.

The loans will range from a low of $500,000 to a maximum of $15 million.

Sectors targeted

The sectors being targeted are agriculture, manufacturing, women in business, and new business ventures, our sources said.

Companies taking up loans will be given seven years to repay and may also be granted a one-year moratorium on the principal, subject to negotiations.

Once approved, the funds will have to be drawn down within three months, either in a single or multiple disbursements.

NCB is Jamaica's biggest bankinggroup, outdistancing Scotiabank in several key metrics used to determine size, including capital and asset base.

But in the arena of loans, Scotiabank has managed to maintain pole position, though NCB's portfolio growth in the past year has been at a faster clip - $18 billion compared to Scotiabank's $13 billion as at June/July 2009.

NCB's facility is likely to be seen by producers as a victory for the unrelenting lobby to lower lending rates.

Low rates urged

Last week, Jamaica Manufacturers Association president Omar Azan urged the banking sector to follow suit behind Scotiabank and start a trend towards low rates.

NCB's facility is not only some four percentage points behind weighted average commercial rates of 12.9 per cent, but it hits more pristinely the 'holy grail' of single digit loans that JMA and other business groups have persistently demanded to remain competitive within international markets where rivals have access to cheaper credit.

But, special windows aside, base lending rates remain high at 19.875 effective November 2 for Scotiabank, which on Friday announced a second reduction in rates since August, while NCB's is almost two points higher at 21.75 per cent, a rate that has seen no adjustments this summer, but which the big bank continues to say is 'negotiable.'

To qualify for its 9.0 per cent funds, applicants must demonstrate the ability to pay and prove that the company is a registered SME.

Disbursements will be in Jamaican currency.

sabrina.gordon@gleanerjm.com

To qualify for its 9.0 per cent funds, applicants must demonstrate the ability to pay and prove that the company is a registered SME.