RURAL agricultural farmers and business operators in Jamaica are set to get a financing boost from the Inter-American Development bank (IDB).

The Bank, under its Social Entrepreneurship programme, is making US$630,000 (J$53.5 million) in loans and grants available to make access to financing easier for farmers and other rural entrepreneurs.

The project, called the Spanish Trust Fund, is being administered by Microcredit Limited (MCL) and will run for three years. Gerard Johnson, the IDB’s representative to Jamaica, signed two agreements with MCL’s director Vikram Dhiman this week, making US$450,000 ($38.25 million) of the funds available for on-lending to the targeted entrepreneurs. Another US$180,000 ($15.3 million) was given to MCL to develop products, modify its practices and expand its services towards lending to rural and agricultural borrowers.

Johnson said the need of the rural enterprises was especially stark, given that only a small portion of the approximately 420,000 micro-enterprises in Jamaica are currently being served by financial services.

“The project will provide much-needed access to financial services and business advice to rural and agricultural entrepreneurs, increasing their ability to manage their enterprises and become self-sufficient in the long term,” said Johnson.

He said that MCL was chosen as the administrators of the loans because of its record of “building systems that allowed a sustainable basis of lending to micro-entrepreneurs”. Johnson also noted MCL’s willingness to extend its reach beyond the traditional locations and methods of lending.

For its part, MCL will increase its branch network from those in downtown Kingston, Spanish Town, Montego Bay and May Pen to four more in Manchester, St Elizabeth, Westmoreland and St Ann, where it will aim to serve 1,400 new micro and small enterprises with loans upward of US$400 ($34,000) per borrower to a maximum of J$100,000.

Dhiman told Sunday Finance that the loans are being made available to agricultural borrowers who have a farm or other agricultural business and to owners of rural businesses in general. The loans will become available in two to three months, once the infrastructure is in place, explained Dhiman.

He added that while the economic crisis makes lending risky, MCL has the capacity to minimise the risks of delinquency.

“Yes, there is a concern. However, we believe that we can evaluate the business of the borrowers and support them with advice and follow-ups through our systems to keep the delinquencies within manageable proportions,” said Dhiman. “The grant will train our loan officers in the new products and allow us to strengthen our systems to be able to support the borrowers.”