Changes to Financing Schemes
The Central Bank of Barbados wishes to announce that it has made changes to its Financing Schemes effective October 1, 2014. These changes which are designed to make the schemes more attractive to both businesses and financial institutions are summarized below:
1. ACCESSING THE SCHEMES
In order to address the issue of slow turnaround times raised by stakeholders, the bank has revisited the application process. Consequently, it has decided that applications should be submitted through the Foreign Exchange and Export Credits and reviewed for documentation before submission to the financial intermediary.
2. AUTHORITY GRANTED TO FINANCIAL INSTITUTIONS
Financial institutions may be granted permission under specific conditions to approve loan guarantees for eligible credits up to $250,000 for one business under specific conditions.
Delegated authority has been granted to financial institutions to approve loans of up to $2.0 million.
3. CREDIT GUARANTEE SCHEMES FOR BUSINESSES
Size of Guarantee
The value of credits eligible for guarantee has been increased from $150,000 to $300,000 for working capital and from $300,000 to $700,000 for fixed assets.
The maturity period for loans guaranteed under the Tourism Loan Guarantee Facility has been increased from three (3) to seven (7) years to facilitate the financing of some capital and refurbishment projects.
Loan to Value Ratio
In an effort to continue to provide support to those businesses that provide accommodation to tourist whose financial performance has deteriorated in recent years, the LTV ratio has been increased to 80%.
4. ENERGY INITIATIVES
The following changes have been made to specifically support energy projects:
- The interest rate for loans under the Industrial Credit Fund has been set at 2.00%, one percentage point below the normal ICF rate.
- The maximum guarantee cover has been set at 100% for the factoring of receivables for energy projects under the Trade Receivables Liquidity Facility.
- Loans to individuals for goods and services in respect of energy projects are eligible for guarantee coverage under the Guarantee Scheme for Businesses.
The guarantee premium which was previously set at 1.5% per annum on the highest balance outstanding during the quarter has been reduced to 0.75% per annum to reduce the debt service costs to those businesses seeking financial support through the schemes.