JMMB loan agreement with IDB to foster women-led businesses | Business
JMMB Bank Jamaica has set aside a fifth or $ 1 billion of a loan it recently signed with IDB Invest, to support small businesses run by women.
JMMB’s agreement with IDB Invest, a member of the Inter-American Development Bank Group, is its first funding agreement with the multilateral agency since entering commercial banking about four years ago. It is also the first time the IDB has approved a gender-focused loan in Jamaica, but the bank told the Financial Gleaner that he hopes to work with other financial institutions in Jamaica on similar development projects.
The $ 35 million loan is repayable over five years. The rate at which JMMB Bank on-lends the funds will be determined by the risk profile of individual borrowers, the bank said.
Women-led businesses will be allocated a pool of $ 7 million to borrow from, funds that JMMB Bank CEO Jerome Smalling said would complement another gender-based lending initiative called ‘Her Wealth’. JMMB was established in 2017 to lend the remaining 80 percent of IDB funds to other small and medium enterprises in all sectors.
A study commissioned by the Development Bank of Jamaica in 2019 found that Jamaica’s micro and small business sector was dominated by women and that microenterprises were largely started by women with a high school education. The survey also found that 72 percent of businesses run by women had a relationship with a financial institution and that women borrowed more than men.
JMMB Bank’s Her Wealth Loan Program was developed before the study, but with an eye on this trend. It provides working capital support, as well as educational, maternal and mortgage funding to women. However, the bank declined to specify the rates at which these loans are issued, once again claiming it was based on unique risk profiles.
“This approach is to take advantage of the huge potential market opportunity for the growth of this market segment, by meeting the unique financial needs of women and filling the perceived gaps in the financial sector,” Smalling told the Financial Gleaner.
The IDB loan also supports the investments that the JMMB Group is making in the broader SME sector as an area of growth. Over the past year, for example, JMMB has opened SME Resource Centers in Jamaica and Trinidad and Tobago, an advisory service that offers advice to entrepreneurs on marketing, taxation, accounting , writing business plans and other general financial management and back-office services. support, with the help of a coalition of partners and other organizations. JMMB Group Limited, the parent company of JMMB Bank, is engaged in various activities mainly in the banking and investment field in three markets: Jamaica, Trinidad and the Dominican Republic.
“While the focus of our loan was not initially focused on the effects of COVID-19, we expect that the funding we provide will alleviate some of the significant issues facing JMMB Bank’s SME clients. SMEs are often the first to be negatively affected during difficult times, such as the current era of COVID-19, ”said Marisela Alvarenga, head of the financial intermediaries division of IDB Invest. Financial Gleaner.
In addition to the BID Invest loan, the development bank is in the process of mobilizing another $ 35 million in financing for JMMB Bank.
“Part of our mandate as a development institution is to bring other investors and third parties into our operations for greater impact. IDB Invest is working with other international banks to complement the funding we provide to JMMB with funding from these banks, ”Alvarenga said.
“By mobilizing an additional US $ 35 million in resources, the total amount will then double to US $ 70 million for the benefit of JMMB’s SME clients,” she said.