The jobs of more than 20 employees of the Island Finance Company hang in the balance as the Puerto Rico-based company weighs its future in the U.S. Virgin Islands in light of increased delinquencies. Island Finance is one of several small-loan companies in the territory.
In a Nov. 16 memorandum to St. Croix employees, company official Jose Gonzalez stated the performance of the V.I. Island Finance companies is continuing to suffer. "We have lost nearly one-half of our outstanding receivables in the last two years," he said, noting that delinquencies are rising and overhead remains about the same.
Gonzalez also said the statutory cap on interest rates is a severe problem for the company. He told employees that the company is "looking for areas where we can improve our performance and to make the company profitable."
Island Finance is looking at several options including: the consolidation of branches, reducing the number of employees, implementing an incentive plan to try to boost originations, and seeking a change in the law to allow the company to raise its rates and increase income. The rates charged by the small-loan lending companies are regulated by Title 9 of the V.I. Code and compliance is monitored by the Office of the Lt. Governor.
Gonzalez's memo said no final decision has been made on which employees will have to be terminated. "These subjects will be discussed with the union on November 29," he said. He pointed to poor economic conditions on St. Croix as having brought the company to this point.
"We hope that the employees will work with the company to turn the situation around and enable the company to be profitable in the future," he concluded.
Although the memorandum was not directed to personnel on St. Thomas, Island Finance recently shut down its offices in Nisky Center.
The lending company has offices in St. Thomas, St. Croix, St. Maarten and Aruba.
