This, he said, is in order to reduce their financial burden, due to high interest rates charged by some banks.
“Some banks are charging very high interest on loans and it is not prudent to start a business with a debt,” the Minister said, while addressing the 7th Jamaica Business Development Corporation (JBDC) Mobile Clinic in Ocho Rios, St. Ann, on Wednesday, July 22.
He noted that some banks are demanding “major collateral” from borrowers and when added to the high interest rates, it could be a recipe for failure even before the business gets off the ground.
“The interest rates that are being charged are too high… and the terms and conditions are onerous. If you are going into business today, you better make sure you have a good business idea and an even better business plan,” he added.
Minister Hylton said the Government is committed to assisting micro and small business to access appropriate financing.
He said the passage and enactment of the Security Interest in Personal Property Act (SIPPS) enables increased access to financing by micro, small and medium-sized enterprises (MSME), by allowing personal property (non-real estate assets) to be used as collateral for loans.
This means that owners of creative works, innovators and inventors, are now able to leverage their intellectual property (IP), such as copyright, patents and trademarks to be used as collateral.
The Industry Minister said “for so many of us who do not own land, getting a loan to finance your venture is a big, big problem, because the banks invariably ask for so much collateral, very little of which is actually used…the whole matter of the over-collateralisation of loans is a problem.”
Meanwhile, Minister Hylton is bemoaning the fact that some 80 per cent of business operators in Jamaica are without a business plan.
“If you fail to plan, you are planning to fail because you can have no business worthwhile doing that is purely in your head,” he said.
Minister Hylton is urging potential and current business operators to make use of the services being offered by the JBDC in setting up their operation, writing business plans and to access other capacity development support.