“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.”
The Minister for Finance – Hon. Roy McTaggart
(CMR) Cayman Island's five retail banks have agreed to participate in a COVID-19 government-guaranteed loan scheme meant to help medium and large-sized local businesses ride out the economic impact of the pandemic it was revealed at Friday's press conference.
The Minister for Finance and Economic Development, Hon. Roy McTaggart shared that the loans will assist businesses with meeting their operating and capital expenditure and refinancing debt needs.
The government will guarantee 50% of the loans not to exceed CI$100 million.
Banks will consider applications from eligible medium and large-sized businesses up to a maximum of CI$200 million – where each medium and large-sized business can borrow up to CI$750,000 and CI$3,000,000, respectively.
The Banks that are working with the Government to provide the scheme that is still subject to formal credit approval are:
- Butterfield Bank (Cayman) Limited;
- Cayman National Bank Ltd;
- FirstCaribbean International Bank (Cayman) Limited;
- RBC Royal Bank (Cayman) Limited; and
- Scotiabank & Trust (Cayman) Limited.
To be eligible to apply for a loan under the scheme, businesses must:
- be at least 60% Caymanian owned;
- be a Cayman-registered company, Caymanian Sole Proprietorship, or Partnership on 22 March 2020;
- have 13 or more employees as at 22 March 2020 and;
- be in good credit standing with their bank; and
- satisfy all credit approval and other requirements of the participating financial institutions.
How will it work?
A medium-sized business is defined as a business employing from 13 to 50 employees or it has gross revenue of CI$750,001 to CI$5,000,000 and a large-sized business is defined as a business employing over 50 employees or it has gross revenue of over CI$5,000,000.
The interest rate will be variable at the prevailing CI Dollar or US Dollar Prime Rate plus up to 1.50%. The current CI Dollar and US Dollar 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 and may also require other security from borrowers, in addition to the government guarantee.
There will be a 12-month 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 7 years and businesses will have up to one (1) year to apply for the loan. It is anticipated that the loan scheme will be available for businesses to apply on 1 November 2020.
The Government will also be waiving the 1 – 1 ½% 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.
As the government guarantee will require the approval of the Legislative Assembly, the Government intends to present a motion during the upcoming Meeting of the Legislative Assembly – which commences on 14 October 2020 – in order to seek the Legislative Assembly’s authorization of the scheme and the issuance of a loan guarantee.