In the face of competition from commercial banks which have established their own small business lending units and the entry of new businesses in the micro-finance lending sector, JN Small Business Loans Limited (JNSBL) said its potential for growth was not by any means approaching saturation point.
A subsidiary of the Jamaica National Building Society, JNSBL now has a loan portfolio of approximately 14,000 valued at $1.3 billion.
Gillian Hyde, general manager of JNSBL told Sunday Business on Friday that while current data was unavailable on market size, growth could become exponential given the level of underserved demand.
"Statistics have shown that the micro-finance sector has impacted just a small percentage of the potential market," Hyde said. "The 2014 Global Entrepreneurship Monitoring Report indicated that approximately 84 per cent of the population has an interest in conducting some form of business and sees it as a career path. With the government's focus on entrepreneurship and small business in Jamaica, we do believe that the industry is poised for growth," she added.
However, challenges within the market segment include "access to collateral, inadequate record keeping, over-indebtedness, culture, high cost of energy and the prevalence of business informality," said the general manager.
JNSBL has sought to manage such challenges through acceptance of non-traditional collateral, business support provided by a credit relations officer whose services "include basic financial analysis to determine the level of financing that can be accessed," and use of the credit bureau to assist in influencing improved client behaviour and loan performance.
Although she declined to state the level of non-performing loans at JNSBL, Hyde said the company continues to operate according to "strict delinquency management procedures and maintains a high-quality loan portfolio performing within international standards".
She said that JNSBL has begun utilising the National Security in Personal Property Registry and noted its usefulness in minimising the risks associated with asset-based lending as well as how it supports increased access to client information.
The Registry is currently being revamped, but Hyde said they were looking forward to the resumption of the operation.
Referring to failed experiments by the government to lend directly to the small business sector, Hyde said "experience may indicate that direct client access to government funds could influence loan performance, and that client behaviour may be influenced or improved when funds are channelled through private sector entities".
She said that JNSBL continued to maintain "a strong relationship with government entities to provide access to funds for business growth".
While she has not disclosed the interest rate bands, Hyde said "JNSBL offers competitive rates to the micro and small business sector, providing access to funds on weekly and monthly terms. Loans are
funded at rates which are set to support those activities related to the management and maintenance of weekly and monthly term accounts. Long-standing customers and customers with good payment records are rewarded with discounted rates".
The company offers micro and small business loans ranging from a low of $30,000 to a high of $5 million.
"JNSBL projects steady growth for the financial year as Jamaicans remain focused on economic change and development," Hyde said, although she declined to state specific growth targets or share current revenue and other performance data.
Based on the annual report of its parent company for the year ended March 31, 2014, the subsidiary made $2.6 billion in loans, earned revenue of $732.6 million and profit of $143.3 million.