Direct Loans

The Loan Origination and Portfolio Management Department (LOPM) has the direct responsibility of managing and administering the direct loan portfolio.

Target sectors

The DBJ will finance large, strategic development projects in the following established sectors:
1. Tourism (attractions, accommodations, health tourism, eco-tourism)
2. Agriculture and Agro-processing/Agri-business
3. Manufacturing
4. Mining
5. Infrastructure & related services (Power, water, sewage etc.)
6. Energy/alternative energy solutions
7. Information and communications technology

Project eligibility

Each project must be able to demonstrate a net economic benefit to the country through any combination of the following general development criteria:

* Employment creation
* Foreign exchange earnings or savings
* Facilitation and/or stimulation of foreign direct investments
* Expansion of export capacity
* Diversification of an existing industry
* Utilisation of local inputs
* Demonstrate long-term financial viability
* Demonstrate the ability to repay DBJ’s loan
* Lead to development of management skills and technological know-how
* Indicate strong market demand for their products and/or services
* Demonstrate the ability to meet projected demand targets
* To demonstrate that its operations have no adverse effects on the environment.
* Capital will constitute no more than 20% of DBJ’s loan.
* Unless it forms part of a development project, the DBJ will not lend money for refinancing and land acquisition.

Company qualification criteria

In addition to achieving project eligibility, it is important for the company to possess the following characteristics:


* Be registered and operating in Jamaica
* Have majority Jamaican ownership (up to 75%). However, Well-documented exceptions could be made however, to allow for the consideration of projects that represent a compelling case for national development.
* Not be sole proprietorship
* Demonstrate sound management practices and capability
* Be current with all statutory deduction payments evidenced by a Tax Compliance Certificate (TCC)
* Be current with property taxes , where applicable
* Disclose all its associated companies and subsidiaries
* Possess effective internal operational control systems

Loan limits

    * The minimum limit for direct lending is J$50M (or US$ equivalent) per project.
    * The maximum limit for direct lending is J$500M (or US$ equivalent) for any one project, company or group.
    (The limits applicable to a project are expanded to a company or group of companies, where a group of companies
    would be defined to include companies with common ultimate shareholders holding in excess of 70% of their equity).
    * If DBJ is the sole lender, the Bank will lend a maximum of 70% of the overall project cost.
    * Where projects are co-financed or DBJ participates in a syndication the DBJ will lend a maximum of 65% of the project cost not financed by other financial institutions.
    * Stakeholder’s equity must be no less than 30% of the total project cost.
    * DBJ will not accept sweat equity as part of a company’s contribution to the cost of the project.

Collateral

Direct loans must be fully secured. The collateral coverage ratio (collateral value:loan balance) must be at
least 1:1. The DBJ will require all direct loans to be secured by any combination of the following securities:
* Debentures supported by any or all of the collateral items listed below:
o Mortgages over real property
o Bills of sale over equipment and other fixed assets
o Assignment of leases, contract revenues, shares, and insurance policies
o Personal guarantees of the principals
o Hypothecation of cash
Where the DBJ co-finances a project or participates in syndicated lending, the DBJ must share a first charge on the relevant collateral on a pari-passu basis with the other lenders.

Repayment terms/period


Projected cash flow and ability to pay determine repayment terms.
Public sector loans and large infrastructure projects have up to 15 years for repayment with moratoria on
interest and/or principal payments of up to 5 years.
Private sector loan repayments are up to 7 years with moratoria on interest and/or principal payments for up
to 3 years.

Fees


DBJ’s commitment fees range between:-
* 1% – 2% – Private Sector
* ½ – 2% – Public Sector
The size of the transaction and risk profile of the project will determine fees.

Development Bank of Jamaica Ltd.
11A-15 Oxford Road,
Kingston 5, Jamaica W.I.
Tel: (876) 929-4000; (876) 619-4000
Fax:(876) 929-6055
e-mail: mail@dbankjm.com
Edison Galbraith,
General Manager,
Loan Origination and Portfolio Management