SCOTIABANK will today open a six-month offer of loans to small and medium enterprises (SMEs) at a fixed rate of 16.75 per cent for one year.

The bank said in a release issued yesterday that the move would lower rates by “as much as 500 basis points”, but, while setting no limit on how much it will lend overall through this facility, it still represents a rate that is seven percentage points higher than Scotia’s SME lending facility launched last year.

Last October, Scotiabank launched a $500-million facility with loans carrying rates of 9.95 per cent — an offer that will expire this June.

A week later, National Commercial Bank, launched a $1-billion fund that offers, until this April, loans priced at nine per cent.

Small and medium entrepreneurs will be able to access the new offer by Scotia between today and August 31, 2010.

The fixed rate of 16.95 per cent will be adjusted after the initial 12-month period to reflect the approved and agreed rate at the time of booking.

“A special moratorium period on the principal payment will also be available on a case by case basis. This is being offered to assist these businesses to better manage their cash flow and make more funds available for working capital,” explained Patsy Latchman Atterbury, vice-president of small business banking.

Entrepreneurs will be able to access from $1 million up to $22.5 million for up to seven years.

“Through this offer, the Bank is aiming at providing special assistance and liquidity support to SME entrepreneurs in guiding their businesses through the particularly challenging economic climate being experienced,” said the release. “Beneficiaries of this offer can use the funds to acquire fixed assets for retooling and re-engineering of processes; for day-to-day working capital; to purchase inventory; and cover other short-term cash needs.”

“We realised that the next twelve months will mean difficult times for any business, particularly the small business sector,” added Latchman Atterbury. “This facility is a demonstration of our continued commitment to work with our entrepreneurs through this period as they manage their tight cash flows and access capital to implement projects they may have in their pipeline.”