Gov’t to guarantee $millions in business loans
(CNS): The government has announced a new guaranteed loan programme to help prop up medium and larger businesses in the Cayman Islands through the current economic uncertainty. Finance Minister Roy McTaggart said it was to help businesses struggling to meet operating and capital expenditure and debt repayment or re-financing.
Speaking at Friday’s COVID-19 press briefing, Premier Alden McLaughlin spoke about the various programmes on offer from government to help people navigate the post-COVID economy and said that the CIG it would now be helping larger businesses.
McTaggart said five of Cayman’s local Class A banks had agreed in principle with government to lend up to a maximum of $200 million to medium and larger enterprises and that government will guarantee 50% or a maximum $100 million of the loans paid out. He said the loans were available to all businesses impacted by the pandemic but were aimed in particular at those in the tourism and hospitality sector.
The minister said that despite the impact of the coronavirus on Cayman, the local economy remained relatively stable, though the risks were there and things could change.
Businesses that meet the criteria will, depending on their size and needs, be able to borrow up to $750,000 for those commercial operations defined as medium-sized and as much as $3 million for big businesses, with government acting as guarantor for up to $1.5 million.
The loans are available to business that are at least 60% Caymanian owned and are, as at 22 March Cayman-registered companies, Caymanian sole proprietorships, or partnerships. They must have had a minimum of 13 employees as at 22 March and be in good credit standing with their bank.
A medium-sized business is defined as a businesses employing between 13 and 50 people or a gross revenue of between CI$750,001 and CI$5 million. A large-sized business is defined as one with over 50 employees or a gross revenue of over CI$5 million.
Businesses meeting these core criteria must then satisfy all credit approval and other requirements of the participating financial institutions. The banks that are working with government to provide the scheme, which is still subject to formal credit approval, are Butterfield, Cayman National, FirstCaribbean, RBC and ScotiaBank.
Fidelity bank is the only high street bank not on the list of potential providers.
Interest rates will be based on prevailing CI dollar or US dollar prime rate plus up to 1.5%. The current CID and USD prime rate is 3.25%. The banks will charge the usual application, commitment and legal fees and may require businesses to obtain insurance in a sum at least equal to the loan amount, among any other internal requirements.
While banks may also require other security from borrowers in addition to the government guarantee, government will be waiving the 1% to 1.5% stamp duty that may be applicable to any charges placed over assets to provide security for the loans. Other stamp duties and normal charges may be applicable.
There will be a repayment moratorium period where businesses will only pay interest during the first 12 months. The interest for the first 12 months will be deducted from the approved loan amount and placed in an escrow account.
The maximum repayment period, including the 12-month moratorium period, is seven years and businesses will have up to one year to apply for the loan. It is anticipated that the loan scheme will be available for businesses to apply on 1 November.
McTaggart explained that because the government guarantee will require the approval of the Legislative Assembly, he intends to present a motion during the upcoming meeting on 14 October.
“The loan scheme will provide much needed relief for medium- and large-sized businesses in the Cayman Islands by providing access to loans which might not otherwise be available, and the government is pleased to be able to help ease the economic and financial hardships caused by COVID-19,” he said.
Meanwhile, the deadline is approaching for smaller entrepreneurs to apply for support under Phase II of the grant programme being offered to micro and small businesses. The premier said this programme is expected to help at least three hundred businesses that have a viable market but need help retooling and innovating to meet the needs of the post COVID-19 business environment.
Applications must be submitted by Friday, 9 October, to the Cayman Islands Centre for Business Development, but these can be made online.
Under Phase II of the grant programme, support packages for micro and small businesses will be provided to cover wages, digital enablement, commercial rent assistance, business-process innovation grants and customised business-continuity plans. Micro business can access packages not exceeding $10,000, while small businesses may access packages up to $20,000.
Applicants must have an up-to-date trade and business licence and other relevant licence or permit, meet the definition of small or micro business as per the Trade and Business Licensing Law, be compliant with all relevant industry regulations and have been operational for at least 12 months as at February 2020. Businesses must be at least 60% Caymanian owned and be going concerns.
The CICBD reserves the right to request additional documents as may be required.
Applications should be submitted to the Ministry of Commerce, Planning and Infrastructure.
Anyone needing assistance can visit the CICBD location at Bay Town Plaza, off West Bay Road. However given the current storm warning applicants are advised to call 244-8009 or email CICBD@gov.ky.
See the full government briefing below on CIGTV, set to begin at the discussion on loans:
People are going to wise up if they haven’t already and hold on to their money. Our economy is going to crash and many people will lose their homes and people will go out of business.
The future is in retraining or people to move from tourism into the corporate sector and other trades.
The government should think about releasing millions to locals to get qualifications and training were needed to find employment.
Giving grants for local trade schools and online certifications in finance.
Subsidizing companies for training of Caymanians to enter their employment.
Negotiating a long term strategy with banks in being more flexible in their policies by allowing people to refinance their homes or extend grace periods if unemployed.
Give concessions on food staples like rice, dairy, flour and meat to bring down the cost of food.
This government is not thinking long term.
What distressed business owner would borrow money right now? The government has not told anyone when the island will be open for business. Business owners have no idea how long they will have to sustain negative cash flow.
Let’s suppose a business receives one of these loans which gets them through the next 6 months but the island is still closed. What then? Get another loan? Many will burn through the money, still end up busted and now in debt up to their eyeballs.
Give us a date. There has to be a date when we decide we’ve done everything and it worked or it didn’t work but we need a date etched in stone…
Insanity.
OK. Tell us when there will be widespread vaccination and/or effective treatment for Covid and/or when the USA and elsewhere get the pandemic under control, and we’ll give you a date.
2029. Can we can stay closed until then? And if not, then we need a date. You don’t sound bright enough to contemplate the logic.
This is a disgrace. Government lending out money that really comes from the private sector. This will end up with more cash being printed and the government ultimately in debt.
The result of this will be serious inflation, followed by hyper-inflation and your CI$ will be worth less than the paper you wipe your butt on.
Your deposits are worthless because they are not guaranteed.
Run to the bank and take your money out and use it before it is worthless.
The government is providing guarantees not physical cash las it is doing for destitute tourism workers and indigenes. The real question is what are the underlying terms of these guarantees and is there a process for government to be appraised of stages of progress and /or possible defaults. It should also be noted that there is a cap on the guarantee as well as the size of business, therefore to create a negative perception at this stage does not add value but rather demonstrates malicious intent. Some may argue that refinancing of loans is more adequate, and there is some validity thereto,however, we are in a crisis which demands prompt assistance , which will in the end in most cases hopefully help in the preparation of our staged opening. In short there is no silver bullet , but sitting and watching ain’t gonna feed and clothe the community we live in.
This program is a stimulus program just like those being enacted in other countries in these perilous times. If the Government did nothing there would be never ending cries from all and sundry. Get a life y’all find something constructive and positive to enhance your life and that of others, it will be time well spent.
The government is asking private business to fund a welfare program through lending. There is no business.
The government caused this mess and now they want their victims to pay for it.
7.49 It’s a giant leap to say Govt. caused this mess.
If you have a crystal ball then please let us know what it told you last March.
It’s not March or even July. It’s now October and we have no idea what December looks like much less the first and second qtr 2021 because the government has gone all in on a shot in the dark strategy.
I have absolute clarity on what December looks like, and it doesn’t involve tourists in the traditional sense.
The end of the Caymanian miracle is finally upon us. All that money, all those years. Now there will be only debt. It was good while it lasted but with nothing put away and no plans to resupply it is coming to its end. The money has already run out and now CIG is running off of borrowed money till that’s all gone. Then they are counting on expats bring in more money while making sure expats don’t return. Great plan. Can’t wait. Expats own Cayman islands. Soon they will run it.
Yay!! Free money!!
These guys have absolutely no clue the extent of the damage they have have created.
They haven’t created anything like that… Newsflash airlines aren’t exactly going anywhere with people cause the entire globe is closed.
READ MY Lips. No one goes on a cruise or a holiday to a high priced Caribbean jurisdiction which they think rightly or wrongly is not safe because of different medical practices. When you get sick you want to be at Home. It’s hard wired into Human existence! Whats a lockdown.. You stay home… When you get sick… You stay home…. So lockdown or get sick and lockdown.
Thank God smarter people run this and most other countries that understand this…
Beg to differ – Bermuda and Cabo have guests there. Maybe not in the numbers they are used to but it sure beats strangling the life out of an entire industry.
Ya know they could just tell banks to refinance homes and loans instead?
Exactly
So now the Cayman public have to step up and subsidise insolvent local businesses? This is just the kind of thing a free market economy like ours, with no direct taxation to soften the blow, should be avoiding like the plague.
With this economic model, such as it is, the only viable approach for governments to take is to let the successful succeed and the unsuccessful go to the wall. Otherwise they are subsidizing failure and possibly profligacy too, and ignoring the sacrifices of those who strive to be successful.
Administration after administration appears desperate to apply welfare state measures without welfare state revenues. It can’t be done.
(Oh and by the way I suspect that these much-vaunted government “surpluses” are a sleight of hand too. Even a quick back-of-an-envelope calculation shows that government revenue is nowhere near its out-of-control expenditure. What other test is there, outside of “creative accounting”?)
I can see those in certain circles rubbing their hands
Always a pleasure watching the “there is no magic money tree” and “people need to take personal responsibility for the issues they face” people inevitably support huge economic interventions at the first sign of trouble.
Imagine the state of affairs we would be subjected to under libertarians and far right goons who believe the state only exists to assist the 1% in their quest of chasing riches ever further
At this point they don’t even need to admit their laissez faire proposals would have led to economic ruin and the collapse of society as we know it because as we watched earlier in the year almost every single government that was capable of doing so introduced sweeping support programs, and intervened in order to keep these capitalistic sham economies going. Regardless of supposed economic principles and budgetary constraints the right wing collectively understands their professed economic agenda would have led to ruination & likely revolution, had they when push came to shove actually proposed to sit on their hands and do nothing, even as they now begin to rollback support and aid they themselves put into place claiming it was unnecessary or problematic .
Funny how when a government has its back to the wall miracles can often be performed when previously they were decried as pipe dreams, radical and impractical.
Food for thought
You arguing for income taxes then?
Or the government could have smartly opened the border 4 months ago and thereby avoided the very calamity they created.
And had all our schools and stores and offices close so an expat can earn minimum wage serving cold Budweiser’s to a guy from Arkansas spending 4 days here? OK then….
Or keep everything open and protect the high risk, which is exactly what we’ll end up doing eventually after enough pain is inflicted on the right people.
It’s inevitable. Too bad we have to learn the painful way.
Except those at highest risk tend to be Caymanians, in their own land, and the beneficiaries of tourism tend to be expatriates earning subsistence level wages, so no.
The cayman islands government is 100% responsible for the economy crashing. They shut down the island and closed off travel. This government will forever be remembered as the government that destroyed 10 years of great growth because of mass fear based on no science.
Politicians still taking their big paychecks, but all the private business owners who fund the government shut down.
Just because there are a handfew of rich lawyers and accountants on this island doesnt mean the economy will survive.
F the Cayman government, and F all the people who want to destroy the futures of cayman’s youth because they are too scared to leave their basements.
100% agree!
👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍👍
Great growth for who? Caymanians sure as hell were not benefitting.
You’re joking right? You have a welfare state and you pay no income tax. Ex-pats contribute the vast % majority of the yearly take to the state coffers through work permits, company incorporation costs, stamp duty etc. etc.
Yet ex-pats pay their own way entirely – schools fees, medical.
Who do you think benefits from the extra money? Caymanians!
If you don’t think you’re benefiting can you only have yourself to blame for electing ineffective and corrupt politicians…
1:31 and 1:40 you are both a bunch of morons. The lending is done by the banks and they will use their normal due diligence before lending to try to ensure that the business is viable long term.
Please read before posting – the article states “Businesses meeting these core criteria must then satisfy all credit approval and other requirements of the participating financial institutions. The banks that are working with government to provide the scheme, which is still subject to formal credit approval, are Butterfield, Cayman National, FirstCaribbean, RBC and ScotiaBank”
If these businesses don’t have access to extra funding now they will fail and have many Caymanians unemployed with CIG picking up the tab. Then where would we be. The past two governments have done a great managing our affairs, including CIG finances – that’s why we are in good shape now.
Thanks Minister Roy.. and thanks Premier and others for the leadership provided over the past 7 years and especially over the past 6 months.
Yes I’m sure they’ll be fondly remembered for bankrupting your lovely island…
the economy is in terminal decline…loans will only make matters worse and postpone the inevitable.
So it now appears the banks will soon be in charge of most everything!
Roy can stick it. I would rather go out of business than owe money to the criminal government.
“Criminal? That’s bloody harsh.”
Yes, but Roy knows the next move. We are all screwed. Getting ready to lay off my team. 6 years loyal – 100% Caymanian. Screw you, Roy McLodge.
Mostly bulls, created for PPM friendlies. Must have min of 13 employees, which small business have 13 employees? Will someone expose their crap!
The programme is NOT for small businesses numbnut😘
Now read again. Reading and comprehension is always good tete❤️
You sound fun
Wanna piece of me?
What do you suggest the Min.Finance should have done instead? (Open Borders is not an option given the Govt. took the opposite decision already.)
Ummm, more quarantine facilities so we do not have hundreds of high earning expats who want to be here stuck overseas? You know, so their Caymanian assistants would not be redundant and their Caymanian landlords would have some rental income to pay the mortgage with? More training for unemployed tourism workers so they can transition into other industries (construction, financial services, retail…).
Good Answers, thanks – The OP
All sounds good superficially, but I can see many businesses defaulting in the future and CIG having to recoup losses by raising duty rates, stamp duty etc. Banks in turn may have to increase fees for all customers. Either way the little people will be left holding the stick by the pointed end.
Since CIG is guaranteeing a significant chunk of monies loaned will they publish what amount and for whom they have guaranteed the loans? And will the vetting of who gets the loans be done by a committee from the banks or another CIG stacked board full of partisan vote buyers?