Susan Gordon, Business Reporter

At left: Omar Azan, vice-president of the Jamaica Manufacturers' Association and chief executive officer of Boss Furniture.   At right: William Massias of Capital Solutions Limited. - File

Subscribers to a new financing facility offered by Capital Solutions and M&T Bank must be making US$10 million to qualify for a minimum loan of US$1 million, a condition manufacturers already say will be "challenging" to meet.

Omar Azan, vice-president of the Jamaica Manufacturers' Association, suggests that the figure be chopped in half, saying that would be more in line with revenue performance.

"I think it is a very attractive deal but the sales should be lowered to even US$5 million," said Azan.

William Massias, president of the asset management company Capital Solutions Limited, has partnered with New York-based M&T on the loan facility which will lend at eight per cent to 10.3 per cent to buy equipment from or made in the United States.

Massias is now going after corporate clients in search of capital under the new strategic direction his company is mapping out to get beyond the earning constraints faced by investment companies from declining interest rate spreads.

Other financial companies have been going the same route of corporate financing, as they diversify their revenue streams.

"The banking platform offers us the chance to do advisory restructuring services, catering to people in the middle- to upper-type service," said Massias. "We don't want to be another JMMB, we want to deal with a niche market."

Fee for business portfolios

Massias was unprepared to disclose the financial arrangement he has with M&T. His company will charge a fee to prepare the business portfolios to ensure loan eligibility, he told Wednesday Business, and would provide background information on companies to M&T.

"We are trying to realign our business model as interest rates spreads are going down so we are looking at other avenues to expand on," said Massias. "We want to be the gateway to financial services and align ourselves to grow."

M&T, whose loans are insured by the U.S. Ex-Im bank, demands no collateral except the owner's personal guarantee, audited financial statements up to three years and trade credit references.

Its eight per cent to 10.3 per cent lending rate on U.S. dollar loan rates are higher than the five per cent to seven per cent charged by government-owned entities on foreign currency disbursements. The charge is 12 per cent if the loan is disbursed in local currency.

Loan requirements too high

But state entities tend to limit the loans to about US$300,000 and lend U.S. currency only to businesses which earn foreign exchange.

Azan, who is also chief executive of Boss Furniture, said the minimum sales requirement of US$10 million per annum to qualify for M&T's loan was too great a challenge.

He commended the Capital/M&T partnership, saying it offered alternatives to the high interest rates dished out to manufacturers, but added that not many manufacturers would be able to access the loans.

"If the limit is lowered, the place would be swarming with people," said Azan.

M&T was reluctant to budge on the revenue requirement, saying size was an indication of a company's strength. But Clement Miller, vice-president for international trade financing, indicated that there could be some flexibility in the loan negotiations, depending on the company's financial health.

"Sales of US$5 million means you are established for at least five years," said Miller.

"The key is finding good credit rating. The ultimate is a company with a good balance sheet with records going back to a minimum of three years."

- susan.smith@gleanerjm.com