EDB looks to boost loan portfolio, expand benefits to small-, mid-sized entrepreneurs
February 20, 2011158
CofC President Raúl Gayá, EDB President Lizzie Rosso and United Retailers
Association President Ignacio Velóz, during Sunday’s news conference.
The Economic Development Bank announced Sunday it is looking to boost its loan portfolio for Puerto Rico’s small- and mid-sized businesses by nearly 10 percent, to $275 million, in fiscal ’12, as a result of efficiencies achieved at the agency over the past 23 months.
That amount could potentially triple to $750 million by sharing the risk with the U.S. Small Business Administration, private banking and local cooperatives, EDB President Lizzie Rosso said.
The public agency responsible for providing financing and guarantees to local start-ups reportedly approved 260 loans worth $88.8 million during the first six months of the current fiscal year, ending 2010 with net income of $9.5 million.
Currently, the EDB’s loan portfolio dedicated to the small- and mid-sized commercial sector is estimated at $252 million. Rosso said the projected increase starting July 1 would boost the agency’s net income by an additional $1.5 million — a stark increase from the $16 million deficit she said she found when she the took over the helm of the agency.
“We had a loan default rate of 40 percent, which we want to continue decreasing to less than 20 percent, as we expand and improve the EDB’s services and implement a loan guarantee program with the U.S. Department of Transportation,” to generate more economic activity, she said. The current loan default rate hovers at nearly 22 percent.
In coming months, the agency will inaugurate a virtual version of its Entrepreneurial Movement initiative to link the island’s major business organizations and government agencies that can help small- and mid-sized businesses to encourage product and service opportunities, she noted.
So far, the agency’s Entrepreneurial Movement program, launched in 2009, has benefited some 12,000 existing and new entrepreneurs islandwide through six summits held last year, Rosso said.
During the news conference, Puerto Rico Chamber of Commerce President Raúl Gayá said it is fundamental that a “solid banking institution” support the small- and mid-sized business sector, to ensure their growth.
As part of its alliance with the EDB, the CofC offers training programs for participating entrepreneurs in areas such as Human Resources Management, Accounting and Finance, and product marketing, among others.
“The CofC and the EDB recently signed a collaboration agreement to conduct a mentoring program for bank clients who wish to gain access to experience in business administration, through the CofC’s ex-president’s council,” Gayá noted.
A review of results
During the news conference on Sunday, Rosso ran through a list of the agency’s achievements so far during her tenure.
Among those are collaborating with the Agriculture Department and the Puerto Rico Tourism Co. to conduct 10 Urban Markets, to encourage the sale of locally grown agricultural products. Rosso said more than 4,000 people have attended the events, where some 40 farmers have generated $30,000 in sales.
“Our latest edition of the Urban Market, held during the first Sunday in February, had more than 6,000 participants who purchased from farmers, who in turn are EDB clients motivated with the new opportunities to improve their finances,” she said.
Meanwhile, through its “Development for the People” program, the EDB has offered orientation services to more than 800 emerging entrepreneurs in seven municipalities, approving 20 cases so far. Through the “Loans for Tourism and Commercial Development of Vieques and Culebra” program the agency has also granted 20 loans to residents of the island municipalities to improve or start their operations.
The EDB is also reportedly working with mayors, Tourism, the United Retailers Association and the Association of Small Inn Owners, Hotels and Tourism Businesses to promote tourism activity throughout the island, touting the benefits of Law 74 of 2010.
The statute offers a 10-year exemption from several taxes and the possibility of extending it to tourism investors for 10 additional years, a 90 percent exemption on taxes on income and property taxes, 100 percent exemption on municipal construction taxes, licensing and excise tax, among other benefits and government assistance.
“I guarantee that the synergy between the cooperative movement, private banks, the Small Business Administration and the EDB is at its highest level, knowing that together we can impact more than $750 million annually in loans for small and mid-sized entrepreneurs, who we feel will be the heroes who will pull Puerto Rico forward,” Rosso said.