SOME $5 BILLION has been designated to finance the various components of the Intec project over three years. The IT Revolving Loan Programme component involves approximately $1.5 billion.
This loan programme is designed for IT projects that have potential for creation of high levels of employment and value added but which could not normally access loans through existing credit programmes of commercial banks or development banks because of perceived risk.
The credit programme is operated through the National Investment Bank of Jamaica (NIBJ) and the Self-Start Fund (SSF).
Loans through the NIBJ and Self Start, which are financed under the programme will be approved by a special Loans Approval Committee. Both the NIBJ and the SSF will appraise their respective projects and make recommendations to the Committee regarding the approval of each project and the applicable terms and conditions.
FUNCTIONS OF THE COMMITTEE
The Committee shall act as the authorising body for all loans under the programme. It shall therefore be responsible for making all decisions regarding the projects to be financed and the terms and conditions of loans. While the Committee is not bound by the recommendations of the NIBJ or the SSF, it is envisaged that the Committee will be guided in its loan approval decisions based on the analysis and recommendations of the NIBJ and the SSF.
Once approval is given, the NIBJ and the SSF will have full responsibility for administering their respective loans. However, in cases of uncertainty regarding any operational matter, the NIBJ and the SSF may seek the views of the Committee.
The Committee shall have the authority to modify this "IT Loan Policy Guide" as deemed appropriate. However, any matter of policy on which the Committee is not enabled to make a decision shall be referred to the Ministry of Industry Ccommerce and Technology, the Development Council (chaired by the Prime Minister) or Cabinet.
Loans shall be used to finance only IT-type projects as follows: computer programming/software development; call centre-type operations; data entry-type operations; other projects considered by the Loans Approval Com-mittee to have IT as their core business and which satisfies the employment criterion.
Loans cannot be used to finance purchase of land, refinance loans or purchase buildings.
A business plan is required which should include a proper financing plan. The financing plan should indicate in detail the items to be financed by the Fund and those to be financed by equity or otherwise and their corresponding cost. In the case equipment, possible source of purchase could be helpful during appraisal in the verification of cost.
LOAN PER JOB CEILING
Project loan size shall be linked to incremental jobs created as a result of the project. For a project to qualify for funding, the maximum loan per incremental job created must be $75,000. So for example, a project which is going to create 1,000 jobs could be eligible for $75 million.
An incremental job here refers to an additional job created as a direct result of the use of the loan funds along with the corresponding amount of equity. Preferences will therefore be given to projects with low loan value per incremental job created. After projects which fit within the loan per job ceiling are exhausted, others which exceed the ceiling may then be considered. It should be noted that this is an important criterion guiding the prioritisation of loans.
SECURITY
The security of loans may include the following:
Collateral: The land and building will act as collateral for the loan. Where the loan is used for the purchase of equipment, such equipment can be used as collateral by way of a bill of sale.
Debenture over fixed and floating assets of the company;
Assignment of revenue earnings of the project sponsors (under lease/rental agreement);
Hypothecation of all relevant receivables;
Pledge of project sponsors' shares in the Project;
Assignment of insurance policies
Personal guarantee to be requested in some case where the risk appears high.
LEVEL OF FINANCING
The fund will provide financing of up to a maximum of 50 per cent of total project cost. The project sponsor shall demonstrate to the satisfaction of the NIBJ that the sponsor has the proposed equity and that the project cost is not under-estimated or over-estimated. An investor must show commitment in equity first before loan funds are disbursed.
ADMINISTRATIVE PROCEDURES FOR LOAN PROGRAMME
Below is a summary of the administrative steps for loan processing:
Investor submits three copies of business plan and completed application form to MICT. A reply is sent by the latest two working days following receipt of document from the investor.
The MICT enters the project proposal on is list of projects submitted for funding under the INTEC Project; copies of the business plan and application form are sent to NIBJ, SSF and JAMPRO by the latest three working days following the receipt of the document.
The Ministry convenes a meeting of the Project Screening Committee within a maximum of seven working days following the receipt of the document. The MICT will inform the client by the latest day 10 of the outcome of the screening exercise.
Following the screening exercise, if a project appears to be eligible for funding, it will be added to the NIBJ and SSF lists of projects respectively where it will undergo detailed appraisal by the applicable institution. The NIBJ/SSF will contact the investor within a maximum of 15 working days following the screening by the PSC requesting additional information, if necessary, and provide general feedback.
Following the detailed appraisal of a project by the NIBJ/SSF, it will be submitted to the Loans Approval Committee for consideration. Where a project ranks high on the list of eligibility criteria and all required documentation are received on time, including due diligence reports, the project should be submitted to the Loans Approval Committee within a maximum of 20 working days following the screening by the Project Screening Committee or 30 working days from date of receipt of project proposal by the Ministry.
Document dated March 1, 2001
