(CNS): The government has announced a new secured loan program to help support medium to large businesses in the Cayman Islands amid the current economic uncertainty. Finance Minister Roy McTaggart said the aim was to help companies struggling to meet operating and capital expenses and debt repayment or refinancing.
Speaking at Friday’s COVID-19 press conference, Prime Minister Alden McLaughlin spoke about the various programs the government has offered to help people navigate the post-COVID economy and said the CIG will now help the big enterprises.
McTaggart said five of the Cayman’s local Class A banks have agreed in principle with the government to lend up to a maximum of $ 200 million to medium and large businesses and that the government will guarantee 50% or a maximum of $ 100 million. dollars of loans paid. He said the loans were available to all businesses affected by the pandemic but were particularly aimed at those in the tourism and hospitality sector.
The minister said that despite the impact of the coronavirus on the Caymans, the local economy has remained relatively stable, although the risks are there and things could change.
Companies that meet the criteria will be able, depending on their size and needs, to borrow up to $ 750,000 for business operations defined as medium-sized and up to $ 3 million for large companies, with the government vouching. up to $ 1.5 million. .
Loans are available for businesses 60% or more owned by Caymanians and as of March 22 are Cayman registered companies, sole proprietorships or Caymanian partnerships. They must have at least 13 employees by March 22 and be in good credit with their bank.
A medium-sized business is defined as a business employing between 13 and 50 people or gross sales of between CI $ 750,001 and CI $ 5 million. A large business is defined as a business with more than 50 employees or gross sales of more than C $ 5 million.
Companies meeting these basic criteria must then meet all credit approvals and other requirements of participating financial institutions. The banks that work with the government to deliver the program, which is always subject to formal credit approval, are Butterfield, Cayman National, FirstCaribbean, RBC, and ScotiaBank.
Fidelity Bank is the only consumer bank not on the list of potential suppliers.
Interest rates will be based on the prime rate in effect in CI dollars or US dollars plus a maximum of 1.5%. The current CID and USD prime rate is 3.25%. Banks will charge customary administrative, commitment and legal fees and may require businesses to take out insurance in an amount at least equal to the loan amount, among other internal requirements.
Although banks may also require other guarantees from borrowers in addition to the government guarantee, the government will waive the 1% to 1.5% stamp duty that may be applicable to any charge placed on the assets for guarantee loans. Other stamp duties and normal charges may apply guaranteed to be approved.
There will be a moratorium period on repayments during which companies will only pay interest for the first 12 months. Interest for the first 12 months will be deducted from the approved loan amount and placed in an escrow account.
The maximum repayment period, including the 12-month moratorium period, is seven years and businesses will have up to one year to apply for the loan. It is expected that the loan program will be available for businesses to apply on November 1.
McTaggart explained that because the government guarantee will require legislative approval, he intends to present a motion at the next meeting on Oct. 14.
“The loan program will provide much needed relief to medium and large businesses in the Cayman Islands by giving them access to loans that might not otherwise be available, and the government is pleased to be able to help ease the economic and financial hardship.” caused. by COVID-19, ”he said.
Meanwhile, the deadline for small entrepreneurs is approaching to apply for support under Phase II of the micro and small business grant program. The prime minister said the program is expected to help at least three hundred businesses that have a viable market but need help retooling and innovating to meet the needs of the post COVID-19 business environment.
Applications must be submitted by Friday, October 9 to the Cayman Islands Center for Business Development, but can be made online.
Under Phase II of the grant program, micro and small business support programs will be provided to cover salaries, digital activation, business rent assistance, business process innovation grants and personalized business continuity plans. Micro businesses can access packages up to $ 10,000, while small businesses can access packages up to $ 20,000.
Applicants must have a current business and business license and any other relevant license or permit, meet the definition of small or micro business in accordance with the Business and Business License Act, comply with all relevant industry regulations and be operational for at least 12 months or more by February 2020. Businesses must be at least 60% Caymanian owned and in operation.
The CICBD reserves the right to request additional documents if necessary.
Applications should be submitted to Ministry of Commerce, Planning and Infrastructure.
Anyone in need of assistance can visit the CICBD site at Bay Town Plaza, near West Bay Road. However, given the current storm warning, applicants are advised to call 244-8009 or email [email protected].
See the full government briefing below on CIGTV, which should begin during the discussion on loans: