The Development Bank of Jamaica (DBJ) is launching today a grant fund facility aimed at boosting young entrepreneurs’ ability to think innovatively and bring new ideas to the local market.

The funding facility, known as Innovation Grant from New Ideas To Entrepreneurship (IGNITE), will embrace the fostering of micro, small and medium-sized entreprises (MSMEs) with ‘out of the box’ ideas in the productive sectors.

“Entrepreneurship abounds in Jamaica. What is not so common, however, are truly new ideas among start-ups,” a release from the Government-owned bank stated. “Many businesses are simply repeats of existing ones, but real success for entrepreneurs usually comes from their ability to think innovatively and bring something new to the market.”

The programme, which targets new businesses through existing SME development and incubator programmes, will be implemented as a two-year pilot to test the grant’s effectiveness in selecting innovative start-ups. The DBJ stated that 30 successful firms will get up to $4 million, covering up to 70 per cent of a project.

The grants will be channelled through Business Service Intermediaries (BSI) that will be selected in a transparent and competitive process. The Intermediaries will then disburse the funds to the entrepreneurs and firms, and will assist the DBJ in monitoring the agreed objectives for each beneficiary for two years.

According to DBJ, the BSIs can recommend how beneficiaries use grant funds, but an evaluation committee gives all approvals. Up to 15 per cent of the grants may be used for administrative expenses, while activities to bring the product to market, inclusive of advertising and testing, may take up to 10 per cent of the project’s cost.

“IGNITE is intended to be a welcome reprieve to many MSMEs. Often, these companies face huge obstacles in acquiring loans or funding and are not eligible for traditional loans because of the high risk in supporting new businesses,” the DBJ said.

“Available micro financing isn’t always a viable option for start-ups because of high interest rates and short loan tenure. Most small businesses also don’t have the collateral financial institutions require. So grant funding is their best option to grow their business,” the institution added.

Over the years, the DBJ has implemented funding facilities to assist start-up entrepreneurs in financing the company’s operation. Last year, the bank introduced the Voucher for Technical Assistance programme aimed at providing technical assistance to SMEs encountering structural problems when seeking to access funds from financial institutions.

The voucher provides up to $300,000 in grant funding for critical business development services such as business plans, financial statements, marketing & strategic plans. The DBJ has also established a partial guarantee facility known as the Credit Enhancement Facility (CEF), which assists MSMEs without the necessary collateral to access loans from financial institutions by guaranteeing up to $15 million or 50 per cent of their loan.