MORE GOVERNMENT SUPPORT FOR BUSINESSES

By Staff Writer

Starting from next month (November) medium and large companies in Cayman will be able to tap into a new government loan-guarantee scheme offering loans on concessionary terms of up to CI$3 million.

This comes as the government announces further support for the private sector, assisting companies to stay afloat during the depressed business environment caused by the COID-19 pandemic.

Taking the form of a government-guaranteed loan scheme, this new initiative is intended to assist medium and large-sized businesses with meeting their operating and capital expenditure and re-financing debt needs.

Making the announcement on Friday, Hon. Minister of Finance, Roy McTaggart said: “This is another programme developed by the government to provide support for our local businesses who find themselves displaced by the continuing effects of the COVID-19 environment particularly those who operate in the tourism industry.”

“It is my fervent hope that business avail themselves of the opportunities provided by the programme,” he added.

Under the loan scheme, five banks in Cayman have agreed to consider applications for loans from eligible medium and large-sized businesses up to a maximum of CI$200 million – where each medium and large-sized business can borrow up to CI$750,000 and CI$3,000,000, respectively.

The Government will guarantee 50%, or a total not to exceed CI$100 million of the loans.

A medium-sized business is defined as having 13 to 50 staff or gross revenue of CI$750,000 to CI$5 million.

Large-sized business are companies employing more than 50 employees or it with gross revenue in excess of CI$5 million.

The ‘Ts and Cs’

As explained by Finance Minister McTaggart, the banks will charge the usual application, commitment and legal fees.

They may also require businesses to obtain insurance in a sum at least equal to the loan amount, among any other internal requirements and may also require other security from borrowers, in addition to the government guarantee.

The interest rate will be variable at the prevailing CI Dollar or US Dollar Prime Rate plus up to 1.50%. The current CI Dollar and US Dollar Prime rate is 3.25%.

There will be a 12-month repayment moratorium period where businesses will only pay interest during the first 12 months. The interest for the first 12 months will be deducted from the approved loan amount and placed in an escrow account.

The government says it will waive the stamp duty - currently 1% to 1.5% - that may be applicable to any charges placed over assets to provide security for the loans. Other stamp duties and normal charges may be applicable.

The maximum repayment period, including the 12-month moratorium period, is 7 years and businesses will have up to one (1) year to apply for the loan.

It is anticipated that the loan scheme will be available for businesses to apply on 1 November 2020.

The Banks that are working with the Government to provide the scheme that is still subject to formal credit approval are: Butterfield Bank (Cayman) Limited, Cayman National Bank Ltd, FirstCaribbean International Bank (Cayman) Limited, RBC Royal Bank (Cayman) Limited, and ScotiaBank & Trust (Cayman) Limited.

To be eligible to apply for a loan under the scheme, businesses must meet the following requirements:

• be at least 60% Caymanian owned; be a Cayman-registered company, Caymanian Sole Proprietorship, or Partnership on 22 March 2020; and have 13 or more employees as at 22 March 2020.

Regarding the number of employees, Mr McTaggart stressed that the majority of staff must be Caymanians as a prerequisite for companies to qualify for the scheme.

They must also be in good credit standing with their bank and satisfy all credit approval and other requirements of the participating financial institutions.

QUICK LA APPROVAL ANTICIPATED

The relevant bill bringing the scheme into effect will be presented for approval as a motion during the upcoming Meeting of the Legislative Assembly on October 14th.

Anticipating its passage, Mr McTaggart said, “The loan scheme will provide much-needed relief for medium and large-sized businesses in the Cayman Islands by providing access to loans which might not otherwise be available, and the Government is pleased to be able to help ease the economic and financial hardships caused by COVID-19.”

“It is my fervent hope that business avail themselves of the opportunities provided by the programme,” he added.

A previous government scheme of grants and concessionary loans to cushion the adverse economic effects of the COVID-19 pandemic, focused on small enterprises.