Scotiabank in Jamaica has set aside $ 3 billion to fund loans to women entrepreneurs as part of a renewed plan to tackle what the bank calls the under-representation of women in business.
The loan program, dubbed Scotiabank’s Women Initiative, is the first to be launched in the Caribbean, following the program’s launch in Canada in 2018, the home country of the Jamaican bank’s parent company.
Scotiabank will bundle loans to women leaders of small and medium-sized businesses, SMEs, with training, advisory services and mentorship. Education and counseling services, if deemed necessary, will be provided free of charge to specific loan recipients.
Loans to women entrepreneurs under the program carry an introductory interest rate of 7.0% per annum for three years.
Each candidate is eligible for loans of up to $ 100 million at the start of the program, while training and counseling will be offered later in 2022.
Applicants must be individual traders, partnerships, incorporated companies, corporations or cooperatives; the female owner must own at least 20 percent of the shares of the company; and the business must have been in business for at least three years with a good credit history.
Under the program, an SME is defined as having less than 500 employees and an annual turnover of up to US $ 4 million.
This is not the first time that Scotiabank has launched a loan facility aimed directly at financing women’s businesses, but the loan pool far exceeds what the bank has offered in the past and targets a network. wider of women.
In 2012, Scotia partnered with loans from the Inter-American Development Bank to members of Women Business Owners Limited for a selected period at a rate of 9.95%. This reserve fund was only $ 300 million.
Since then, the 132-year-old bank has launched numerous lending facilities aimed at the MSME sector, where women-led businesses proliferate, including a $ 3 billion fund from which it has provided loans to small businesses. companies at a special rate of 9.99% in 2019.
Scotiabank and its commercial banking competitors have increasingly entered the small business segment to drive growth in their loan portfolios. Initiatives continue in the era of COVID, which has served to either squeeze loan portfolios or slow growth.
Scotia Jamaica Group, the operator of Scotiabank in Jamaica, for example, ended its 2021 fiscal year with lower interest income, from $ 27.2 billion to a preliminary estimate of 24.5 billion. billion dollars, which ultimately led to a reduction of $ 600 million in its bottom line to $ 8.4 billion. The size of the No. 2 banking group’s loan portfolio also increased from $ 220 billion to $ 208 billion.
The COVID-19 outbreak has shed light on the depth of the challenges women face, said Audrey Tugwell-Henry, president and CEO of the Scotia Group, but she also presented loan opportunities for the bank. .
âThe pandemic continues to have a disproportionate impact on women. This has highlighted the inequalities for women who tend to earn less, save less and be strongly represented in the informal sectors, and these sectors are the hardest hit by the pandemic, âTugwell-Henry said during the conference. launch. of the initiative Friday.
âToday, we are taking action to address critical statistics that will help correct the under-representation of women where it matters most. We believe that in this environment, it is time for us, as a leading financial institution in the region, to react in a powerful way, âshe added.
The Latin America and the Caribbean region has the second highest level of bankruptcies among women-owned businesses, according to data provided by Scotiabank. Additionally, two-thirds of startups in Jamaica have failed in the first five years, while others struggle to hit the five-year mark.
âWhile all entrepreneurs face challenges in starting a business, it has been found that women have additional hurdles to overcome. One of the main issues identified as the reason for failure is the lack of adequate funding, âTugwell-Henry said. âIn Jamaica, only 17 percent of women entrepreneurs are in the formal economy,â she said.
To date, the Scotia Women Initiative has provided loans to over 5,000 women entrepreneurs in Canada.