SMALL and medium-sized enterprises (SMEs) grabbed up lower-cost loans made available through Scotiabank Jamaica’s Productive Sector Growth Fund (PSGF), launched last October, while the high demand pushed the bank to approve more than the $500 million it put aside for the lending facility.

Vice-president, risk management at Scotiabank Monique French two weeks ago told Sunday Finance that the lending facility, which lent money to SMEs at 9.95 per cent interest, was “significantly over-subscribed” by borrowers despite the general expectation that selling loans in a recessionary climate would be difficult.

“We had a very strong response overall and a good response to the sub-fund of $75 million aimed at start-ups,” said French. “We approved more than $500 million in loan applications, and drawdowns to date are approaching $500 million. We are particularly pleased at this very successful take-up as our facility was expressly reserved for the productive sector and employment — generating projects.”

The PSGF was divided into two parts, providing $75 million for businesses under two years old and $425 million for businesses to expand and improve production.

So far, businesses from key industries have been using the Fund to explore expansion.

“Small and medium-sized customers accessing business loans, particularly through the PSGF, have been from the manufacturing, services and agriculture sectors,” French told the Business Observer.

Scotiabank’s other loan fund for productive sectors, the Scotia Farm Programme, launched in May this year, is also doing relatively well, according to French, though the requirements limit the types of businesses that are eligible for the loan.

The $100-million fund was provided at a rate of 9.95 per cent to assist farmers plant cash crops for local consumption. The loans are available to farmers registered with the Rural Agricultural Development Authority and is available between April 29 and December 31, 2010.

“Scotia’s Farm programme launch was well received by the agricultural community,” said French. “Based on the season for eligible crops and the present supply of crops on the market we expect the applications flow to pick up in late summer.”

She did not disclose the extent of the current loan take-up.

She noted, however, that given the current global financial crisis demand for business loans has not been robust.

“We have seen many businesses take a more cautious approach to assuming debt given the relatively muted consumer demand at present and some uncertainty regarding when the economic environment will strengthen,” French said.