Qredits and NRPB representatives posing for a group photo on July 20.
PHILIPSBURG–The St. Maarten Trust Fund’s Enterprise Support Project (ESP) was given a virtual launch on Tuesday, with project partners coming together via online teleconferencing platform Zoom to celebrate its long-awaited inauguration.
The ESP is a US $35 million relief programme funded by the World Bank-administered St. Maarten Trust Fund. The project will collaborate with financial institutions to offer loans and grants to help micro-, small- and medium-size enterprises (MSMEs).
There are three packages MSMEs can receive under the ESP.
The first is a mixed grant and loan scheme called asset and repair (AR). Each AR package must contain a grant of 65 per cent and a loan of 35 per cent of its total value. The loan has a maximum interest rate of eight per cent.
The funds can be spent on productive assets with the ability to generate profits, and for minor non-structural repairs such as painting, plastering, tiling, and basic roof repairs. The repairs exclude load-bearing components.
The second package is called working capital (WC), which is a 100 per cent loan at maximum four per cent interest rate. The project will assume 80 per cent risk and the remaining 20 per cent will be taken by the cooperating financial institution. Loans can have a maximum value of $60,000.
The third package is loan refinancing, which allows businesses to refinance existing loans up to a maximum of $20,000. The existing loan must have originated before the ESP’s launch and the loan must still be performing.
To be eligible for the ESP packages, entities or sole proprietors must be for-profit enterprises with maximum average monthly revenue of NAf. 100,000; registered and up-to-date at both the Chamber of Commerce and Industry (COCI) and the Tax Office; compliant with St. Maarten’s environmental policy and the World Bank’s social and environmental requirements; and operating within an eligible sector.
Business sectors ineligible for ESP packages include land purchase, weapons and munitions, gambling, casinos, wildlife products, unbounded asbestos fibres and commercial logging.
ESP loans must be repaid by the Trust Fund’s termination. While government has said it is looking for ways to extend the duration of the Trust Fund, it is set to expire on December 31, 2024.
“In case a company defaults [on its loans – Ed.], this will most likely come from other repayment agreements or recovery via collateral. Financial institutions will follow their regular process to recover defaulted loans,” National Recovery Program Bureau (NRPB) Program Manager Elozona Ochu told The Daily Herald on Tuesday.
An MSME can apply for a total of two packages, including AR and WC. The maximum amount of all packages for an MSME is $150,000.
Start-up businesses are also eligible for ESP packages. However, financial institutions may have additional criteria for start-ups.
In total, “Connected MSMEs” cannot get more than three times the maximum value of $150,000. Connected MSMEs are defined as enterprises that have a common owner with more than 40 per cent share in each of the MSMEs.
“The Enterprise Support Project will provide grants and financing to eligible MSMEs through participating financial institutions, which currently include Qredits and Windward Islands Bank.
“MSMEs are important for the economy and employment in St. Maarten, which often lack the financial resources of larger firms, so are more vulnerable to shocks. Many firms continue to struggle since Hurricane Irma [in 2017], and have been further severely affected by the unprecedented economic disruption caused by COVID-19.
“Business continuity planning training will be provided to enterprises and financial institutions in St. Maarten, as well as training to lenders to improve their MSME lending products. Overall, the project intends to provide direct financial assistance to more than 500 MSMEs, including training to 150 MSMEs over the next four years,” said the World Bank in a press release on Tuesday afternoon.
Representatives of the St. Maarten government, the NRPB, COCI, the World Bank, Windward Islands Bank (WIB), financial institution Qredits, the Dutch Representation Office in St. Maarten VNP, and the Central Bank of Curaçao and St. Maarten (CBCS) were on hand for the virtual launch.
Finance Minister Ardwell Irion said he had been frustrated with the delays in rolling out the project, but acknowledged that it could not have come at a better time given the economic downturn caused by the coronavirus crisis. “Everything happens for a reason,” said Irion.
WIB General Managing Director Derek Downes said the project is being unveiled at the right time, when many businesses need capital injection.
“We are looking forward to support hundreds of small entrepreneurs in St. Maarten to recover from all the damage after Hurricane Irma, but also from the actual COVID-19 situation. Qredits is honoured to be part of this recovery project with NRPB.
“It gives us a sense of pride knowing that we at Qredits can play such a significant role in … assisting businesses and individuals to overcome difficulties, as well as creating opportunities such as new investments and businesses,” said Qredits Director Elwin Groenevelt in an invited comment on Tuesday.
“MSMEs are key for the island’s economic recovery and for job creation. This project can benefit St. Maarten’s economy by supporting viable local enterprises, so that they can continue operations, and better prepare for the future,” said World Bank’s Program Manager for the St. Maarten Trust Fund, Michelle Keane.
“Though there were many challenges to overcome, with much perseverance and an eagerness to propel MSMEs forward, we are proud to announce that ESP has been launched. Together with the Central Bank, WIB, and Qredits, we welcome other local financial institutions to help us build a stronger and more resilient St. Maarten.
“What is also key in this project is the opportunity for St. Maarten to properly develop its MSME sector through other important aspects of the project. This is a study to strengthen the resilience of the economy to future shocks, in addition to incorporating trainings for enterprises and participating financial institutions. The aim is to improve MSME lending capabilities to ensure better MSME access to finance and improving the resiliency of businesses.
“We therefore look to the Ministry of Economic Affairs and other organisations such as the Social and Economic Council SER and COCI to foster a strong and cohesive collaboration in the spirit of private-public partnerships to provide support to the NRPB and the ESP team in successfully executing this mission,” said NRPB Director Claret Connor.
“St. Maarten was heavily damaged by the hurricanes of 2017, including its economy. For St. Maarten’s reconstruction I believe it is important for the private sector to recover in an innovative and flexible manner. With the launch of the Enterprise Support Project, the need to support MSMEs is addressed. The project design is geared to contribute to the sustainable recovery of the private sector in St. Maarten. I hope to see tangible results on the island soon,” said VNP Head Chris Johnson.
Source: The Daily Herald https://www.thedailyherald.sx/islands/enterprise-support-project-is-given-a-virtual-launch