$200m loan capital support for businesses
July 16, 2021 9:20 pm
$200 million working capital support in the form of loans to help Fijian businesses meet operational needs, is expected to assist nearly 20,000 businesses.
In his national budget address, Minister for Economy Aiyaz Sayed-Khaiyum says the government will subsidize borrowers’ interest costs on these loans for the first two years, with a funding of $8 million in the 2021-2022 Budget.
There will be additional funding of $8 million in the following budget.
Sayed-Khaiyum says businesses will have the freedom to use this assistance where they need it most adding they can pay wages and salaries, rent and utilities, purchase stocks or cover any other working capital needs.
Micro-businesses with turnover less than $50 thousand will be eligible for a $10,000 loan.
Small businesses with an annual turnover of $50,000 to $300,000 will be eligible for a maximum loan funding of $20,000. Medium-sized businesses with an annual turnover of $300,000 to $1.25 million are eligible for a maximum of $50,000.
Large businesses with a turnover of more than $1.25 million can access up to $100,000.
Sayed-Khaiyum says the Reserve Bank of Fiji will provide special funding of $200 million at a rate of 0.25% that can be accessed by commercial banks, the Fiji Development Bank and other licensed credit institutions.
They can then lend these funds at a maximum rate of 3.99 per cent as interest-only loans for the first two years.
This means for the first two years, none of these businesses will pay anything — because Government will pay all the interest.
Sayed-Khaiyum adds, for the comfort of the financial institutions, the government will guarantee 90 per cent of the loan for micro-enterprises, 85 per cent for small businesses, 80 per cent for medium-sized businesses and 75 per cent for large businesses.
The government has also allocated $5 million in the 2021/2022 Budget for RBF to manage the guarantee.