Two months after government announced a loan scheme to help medium- and large-sized businesses deal with economic fallout from the COVID-19 pandemic, five commercial banks are starting to accept applications.
Speaking via Zoom in Parliament on Wednesday, Finance Minister Roy McTaggart announced that four banks – Butterfield, Cayman National, FirstCaribbean and ScotiaBank – launched the scheme on 9 Dec., while RBC Royal will begin to accept loan applications on Monday, 14 Dec.
“Medium- and large-sized entities that meet the eligibility criteria and the size definitions may approach any of the participating banks to make an application for a loan under the scheme,” McTaggart said.
Loans under the programme are intended to help businesses meet their operating and capital expenditure, as well as debt-refinancing needs.
To qualify, businesses must either be medium-sized with between 13 and 50 staff or have annual revenues of between $750,000 and $5 million, or large businesses above these thresholds.
All businesses must be at least 60% Caymanian-owned and have been registered as a company, sole proprietorship or partnership on or before 22 March.
Businesses must also be in good credit standing with their bank and satisfy all other credit approval requirements of participating banks.
Banks will also charge their usual application, commitment and legal fees and, despite a government guarantee for half of the loan amount, they may require other security from borrowers.
While medium-sized businesses can borrow up to $750,000 under the scheme, large business will be able to access up to $3 million in loans.
The maximum interest payable on the loans is the prevailing prime rate plus a margin of 1.50%. Currently, the prime rate is 3.25%.
However, no interest payments have to be made in the first year of the loan and the maximum repayment period is seven years.
The five participating banks will provide $200 million under the loan scheme, while government is guaranteeing up to half of that amount in potential losses.
Government will also waive the 1%-1.5% stamp duty that may be applicable to any charges placed over assets to provide security for the loans.
“On behalf of the government, I wish to thank the participating banks for their willingness to partner with the government in assisting medium- and large-sized entities in any financial difficulties they may be experiencing,” the finance minister said.