April 13, 2024
Banking & Financial Services

Bancolombia Extends US$4.3 Billion in Low-Interest Payroll Loans to 293,000 Small Businesses Following President Duque’s Prodding on Coronavirus-Crisis Aid

Medellin-based banking giant Bancolombia announced April 27 that it has approved COP$17.4 trillion (US$4.3 billion) in payroll-coverage loans to 293,000 small, medium and independent businesses in Colombia via a new National Guarantee Fund (FNG) Coronavirus-crisis program.

Under the FNG program, the government of Colombia is assuming 90% of the payback risk, thus helping banks to aid micro, small, medium and sole-proprietor businesses (SMEs) to pay workers temporarily idled by the Coronavirus crisis.

President Ivan Duque announced April 21 that “with a 90% guarantee, to finance those payrolls of the SMEs, there is no excuse for [banks and lenders] not doing so. We also understand the prudence that risk analyses should be done, but we also need to reconcile these quickly.”

In the wake of Duque’s remarks about some slowness in lender loan-request response times during the Coronavirus crisis, Bancolombia — Colombia’s biggest bank – has since responded to a tidal wave of loan requests covered by the new FNG program.

“We are inviting SMEs, businesses and independents to use this [credit] line to secure employment and pay their payroll as this should be a priority,” said Bancolombia Business Vice-President Cristina Arrastía.

The new payroll-coverage loan deal carries a term of up-to-36-months and annual interest rates varying from 7.66% to 12.9%, she said.

“We know that in Colombia SMEs generate 80% of employment and that companies have different needs to continue operating in the midst of this situation.

“This [program] means having more resources to meet short-term needs by having better cash flow, with significant reductions in annual interest payments. Those interested should call their [Bancolombia] account executive for the details of how to access or they can call the phone line 01-800-0912345 without leaving home,” she added.

To access the special credit line, applicants must prove their current payroll — by providing a copy of Colombia’s mandatory Integrated Contribution Settlement Return (PILA) of the previous month — and also provide continuing proof of payment of their financed payroll.

President Duque added in his April 21 comments on the new FNG program that Colombia’s Superfinanciera financial regulatory agency “will monitor whether the credits for financing the payrolls of MSMEs are being carried out.”

In addition, the national government has also boosted credit capacity with Banco Agrario and Bancóldex to help agricultural producers and exporting companies confront the current crisis, he added.

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