As part of a strategy to face the government’s current liquidity challenges and continue contributing to the island’s economic development, the Puerto Rico Economic Development Bank announced Monday it will be capping credit lines at $500,000 from the $5 million limit it formerly offered.
The EDB, which is currently reporting some $20 million in liquidity, is also now requiring that credit lines be in participation with private commercial banks.
“The EDB has the mission to provide financial products to small and medium businesses, thus contributing to the economic growth of Puerto Rico. However, times have changed and the we’re not exempt from the economic situation being experienced by the government,” EDB President Joey Cancel-Planas said.
“We’re taking the necessary measures so that despite our economic limitations, we can continue funding our entrepreneurs. To the extent that we control the amount in credit lines and count with the support of private banks, we can finance new and existing businesses that create more jobs and move our economy,” he said.
For years, the EDB has granted credit lines of up to $5 million for operating capital. Specifically, the EDB has helped contractors, both local and federal, tap into these credit lines while waiting to get paid for services rendered.
“We have reduced credit lines to $500,000, so that we can help more entrepreneurs. We’ve been a helping hand, and we want to continue to do so within our means,” he said. “However, we believe it’s time for a real integration between private banking and the EDB.”
“It is ironic that for years the EDB has been providing credit lines to businesses whose deposits and operational accounts are in private banking,” Cancel-Planas said.
To address that issue, the Puerto Rico House of Representatives is considering Bill 1147 to amend the EDB’s organic law to allow it to manage its client’s operating accounts.
The EDB has granted more than $144.6 million in new credit lines between January 2013 and April 2016, and more than $117.7 million in renewals, the agency said.