WESTPAC Bank yesterday launched a new loan facility for small and medium enterprises, allowing full funding of business equipment or motor vehicle purchases.
The bank's head of corporate and business banking, Cameron Penfold said the new product was a result of Westpac listening to its customers following a review of customer needs.
"Our findings showed that SMEs need equipment but do not wish to tie up valuable capital to purchase them outright or make a cash contribution towards a loan to buy them," Mr Penfold said.
"This posed a threat to their stability to increase production and performance and therefore hampered their business growth.
"We knew however that such businesses could afford to make monthly payments thus the provision of 100 per cent funding options."
Even microfinance business operators can access the loan facility.
"As long as it is a viable and profitable business," Mr Penfold said.
The facility can also be used to pay Value Added Tax to the Fiji Revenue and Customs Authority.
Mr Penfold said customers could use the facility to pay VAT for large purchases. He added that in these instances, operators had to pay about $50,000 to $60,000 for VAT, which could hurt their cash flows. The loan could assist them while they wait for VAT refunds from FRCA, Mr Penfold said.
The loan will not charge a "flat rate" but rather on a diminishing value. Mr Penfold explained that when institutions quote 6 or 7 per cent interest rate and if it was a flat rate, the interest rate was actually double digit.
But on diminishing value, if the rate was 7 per cent it was truly 7 per cent, he added.
One of the other benefits of accessing the facility, is that customers own the goods from day one, which means it can be on their balance sheet and they can claim for appreciation.
"This new product falls in line with our vision of being the number one undisputed local bank in the Pacific and our goal to improve the wealth of Pacific communities in the areas in which we operate," Westpac general manager, Adrian Hughes said.
"We are a strong and secure bank and will continuously ensure that our focus is spread across all market segments."
Reserve Bank of Fiji governor, Barry Whiteside said the facility should help SMEs and the growth of the segment in the country.
He said all banks were looking at the SME.
"We hope that this type of facility would help the growth of the SME sector," he said.