JN Small Business LoansYear 2000 And Beyond :: Thelma Yong

Mission Statement & Objectives Mission Statement

To deliver innovative and accessible credit in a timely and

profitable manner to micro and small entrepreneurs in Jamaica

who have limited access to loans from traditional banking sources.

Objectives– To support the development of the Jamaican micro-enterprise

sector– To assist micro entrepreneurs to increase their income and

improve the quality of their lives.– To create new jobs and maintain existing ones in the Jamaican

economy

Background• Began operations in October 2000 as JN Micro Credit.

• A micro-credit portfolio was purchased from FINSAC by Jamaica National Building Society

• Portfolio at that time consisted of 2,039 loans for a principal value of $37.9 million

• Staff complement of 13, of which 8 were field officers

• Operated from 7 locations in two parishes-Kingston & St Catherine

• In 2003 the company’s name was changed to JN Small Business Loans Ltd.

Target Audience

Persons between the age group 18-65 years who:– own and operate a business in the micro informal

commercial sector and need capital injection of between $60,000 and $1 million to expand their businesses

– own and operate a Small Business and need up to $3 million to improve or expand their businesses

– are in the tourism industry or supply at least 30% of their products to the tourism industry

– Individuals who need a personal or education loan up to $250,000

– Individuals who need a motor vehicle loan up to $2 million

Loan Products

Loan

Collateral Accepted for micro loans

• Bill of Sale over household appliances with serial numbers (e.g. refrigerator, television, component set)

• Motor vehicles

• Bill of Sale over tools with serial numbers (e.g. sewing machine, band saw)

• Bill of Sale on assets financed with loan funds

• Third party guarantees.

Qualification Criteria for micro loans

• Must be at least 18 years old

• Must be in business for at least six months

• Must have a tax-payer registration number (TRN)

• Must be able to show evidence of paying bills on

time.

• Must be of good character

Required Documents• Proof of identification-

• either a passport, a driver’s license, or the National ID card

• A TRN card

• 2 recent passport-sized photographs

• 2 written recommendations, one of which must come from either:- Justice of the Peace- School Principal- Senior Police Officer- Minister of Religion

• Completed JNSBL Pre-application Form

Bizboost loans for small and medium sized businesses

• To finance the purchase of fixed assets and to provide working capital support for small and medium sized businesses engaged in value added activities.

• Loan amounts between $500,000 and $3 million

• Interest rate 22% on the reducing balance

Loans to Small and medium sized businesses

• Collateral – Real estate– Motor vehicles– Equipment– Hypothecation of deposits– Third party guarantee

Loans to small and medium sized businesses

• Requirements– A business plan– A clearly established market– Prior experience in the type of business

Tourism Enhancement Fund (TEF) Development Loan

Offered to individuals, partnerships and companies (including new businesses) which provide goods and services to the tourism sector.

A minimum of 30% of the business must be committed to providing goods and/or services to the tourism sector.

Tourism Enhancement Fund (TEF) Development Loan

• Maximum loan: $5 million

• Interest rate: 5% per annum

• Maximum term: 5 years

• Moratorium: 6 months (maximum) on the principal

• Collateral:

Guarantee of Directors PLUS any of the following:

– A first charge over any asset purchased with loan funds

– Real estate

– Motor vehicle and/or equipment

– Any other assets owned by the applicant

Inception March 2012 % Increase

# of Loans in Portfolio

2,039 11,908 484

Portfolio Value J$37.9 M J$597.9M 1,478

Staff 13 147 1,030

Field Officers 8 79 887

# of Regions 2 6 200

# of Locations 7 26 271

Milestones

Milestones (cont’d)





Total = 280,823


Total = $13,028,933,600


Employment created and maintained sinceinception - 74,715

Portfolio Information

Portfolio Information (cont’d)





TEF Loan Scheme

• Committed from the TEF - $310M• No. of loans disbursed – 120• Value of loans disbursed - $288.75M• Number of loans in the portfolio – 106• Value of loans in the portfolio - $180.32M

Strategic Alliances

Collections through post offices in Linstead, Bog Walk, Greater Portmore, Waterford, Crofts Hill, Kellits, Albert Town and Lluidas Vale

Loan funds

Loan funds, loan disbursements, collections and Information Technology support

Loan funds

Loan Funds

Technical assistance and pending loan financing

National Investment FundNational Investment Fund

Loan funds

ACHIEVEMENTS

Implementation of GIS Technology

The GIS technology is used to:– Map & locate our clients, offices and payment

locations– Conduct vulnerability assessments on the location

of our clients’ businesses and homes– Locate areas for expansion/areas without any

loans – Discover patterns/characteristics associated with

delinquent clients

JNSBL & GIS Technology (cont’d)



Implementation of a Disaster Mitigation Programme (DMP)?

• The DMP is designed to acquire non financial information about clients to determine how susceptible they are to various hazards especially hurricanes, landslides, flooding and earthquakes.

• Information on clients’ locations and building structure are collected to determine their vulnerability to these hazards.

Disaster Mitigation ProgrammeInformation collected is matched with our GPS waypoints on a map to give a graphical picture of our clients’ vulnerability.

• A three-year initiative being undertaken by a broad coalition of microfinance institutions and other entities around the globe to protect micro clients from potentially harmful financial products and to ensure that they are treated fairly.

• It embodies six core Client Protection Principles setting the standard for all providers of micro finance worldwide.

Implementation of the Smart Campaign

Six Core Principles

Achievements (cont’d)

Achievements (cont’d)

CHALLENGES

• Very little information about potential clients resulting in difficulty in assessing credit risk

• Acts of God- hurricanes and flooding• Potential clients have no bankable collateral• No accounting records or documentation on

income and expenses• No separation between business and

household cash

Challenges

• Social Unrest• Collateral Issues- no bankable collateral and

proof of ownership of appliances and furniture

• Client selection and retention-building a culture of on time repayment

• Financing portfolio growth – sourcing appropriate funding

How we have adapted to the market

• Full responsibility of the Field Officers for their portfolios

• Field Officer gets an incentive which includes a bonus for the loans disbursed and the portfolio outstanding and is discounted for poor loan quality

• Field Officers are audited regularly and bear consequences for infringements


• Developing a close relationship with the clients by creating constant access to financial services.

• Graduation principle – client is rewarded if they show good repayment behaviour-bigger loans and better conditions

• Analysis of Debt Capacity which takes into account business and family expenses


• Analysis of clients’ character by obtaining verbal and written references.

• The terms of a loan depend firstly on the financial and risk analysis and secondly on collateral

• Purposes of collateral are to induce the client to repay and to cover losses of the organization


• Clients need to fear that they will lose something valuable (psychological pressure).

• Repayments are monitored daily• Enforcement measures are strict and fast as

possible• Bad repayment disqualifies a client from

further loans


• Good repayment qualifies clients for bigger loans and better terms

• Approval and disbursement of loans are approved by a Credit Committee that guarantees compliance with procedures, transparency and high quality decisions


• Acts of God – provide disaster recovery loans, provided grants to those worst affected, rescheduled loans for those with adequate repayment capacity, and write off of loans where clients have lost both business and home

Strategic Initiatives 2012

• Roll out of the new loan underwriting methodology

• Partner with the Jamaica Business Development Corporation to support the craft industry

• Implement mobile finance in conjunction with JNBS and JN Foundation


• Develop and implement a new loan underwriting application

• Continue the growth of the micro credit portfolio by increasing the number of Field Officers and locations

• Continue the growth of our branch network


• Provide additional payment options to our clients, particularly in rural areas.

• Continue the relationship with the IFC, DBJ, Pan Caribbean, USAID and EXIM Bank

• Develop a strategic alliance with the IDB• Continue to seek new financing for the micro

credit portfolio.

“WE MEAN BIG THINGS FOR SMALL BUSINESSES”!

Website: www.jnsbl.com

Email us at: [email protected]

Find us on

http://www.jnsbl.com/

mailto:[email protected]