Slow update of small business enhancement fund

A Government-backed programme to make it easier for small businesses to access funding has been performing below par, with a less-than-favourable uptake, Minister of Industry, International Business, Commerce and Small Business Development Donville Inniss said yesterday.

As a result, Inniss said, the Central Bank-administered Enhanced Credit Guarantee Fund, launched seven months ago, was being reviewed, with a view to expanding the number of lending institutions involved.

“I am not yet satisfied at the level of uptake of it based on the reports I have gotten from other institutions. But that too is under review by the Ministry of Finance and my ministry, working in partnership because we believe that perhaps it may need to be extended to other institutions [for] lending to the sector,” Inniss told the media following a tour of the Barbados Institute of Management and Productivity this morning, where he got an update on the institution’s performance and plans for the future.

The Government-backed fund, which is being financed to the tune of $70 million by the Inter-American Development Bank and the China Co-Financing Fund for Latin America and the Caribbean, provides loans of up to $2 million to small and medium-sized enterprises (SMEs) with no more than 20 employees and annual sales or total assets not exceeding $20 million.

The funds are issued via intermediary financial institutions, including commercial banks, Consolidated Finance Company Ltd, Globe Finance Inc, Signia Financial Group Inc, Capita Financial Services Inc and Citicorp Merchant Bank Ltd, which will also be responsible for setting the interest rate.

Stating that the SME sector was critical to the island’s growth and development, Inniss said it was important for small businesses to easily access financing to develop their operations, and he called on more financial institutions to play a greater role in making it easier for SMEs to access funding.

“When I look at the level of liquidity in the banking system in Barbados it is quite significant and has been [that way] for a long time, and it tells me that there is money out there. But we have to understand why it is that the established financial institutions are not necessarily lending to the sector to the extent that they ought to be lending, from our perspective,” Inniss said.

However, the minister also said while individuals sometimes complained that they were being turned down for loans, they often failed to provide adequate information to meet the criteria.

“You realize the business plan might need to be tweaked a bit more [or] maybe more emphasis needs to be placed on your marketing strategies. Too many enterprises in Barbados, even at the micro level, don’t pay enough attention to human resource issues. There is the need to put the right management systems in place, not just for the corporation but for the financial aspect of your business, and needless to say, to place some emphasis on governance structures and governance issues in any organization,” said Inniss.

He said his ministry would soon roll out out a new small business policy framework to lead “a very frontal attack on all of the issues”, adding that it was not just about providing the money, but to create the right environment and policies to make it easier for the sector to access funding.

2 Responses to Slow update of small business enhancement fund

  1. Hal Austin August 23, 2016 at 9:17 am

    The job of banks is to lend money. But the foreign-owned banks in Barbados have been on strike for a number of years, depriving small businesses from funding.
    Activists must bring the banks to book by organising account owners to descend on a particular bank on an agreed time to withdraw their savings.
    That is what sis called a ‘run’ on the bank and no retail bank can survive such an attack. Liquidity is the life blood ob banks. If they want to plays hard ball, then small people must fight back.
    Pick a bank, anyone, and make them pay for their horrible customer relations.

  2. The Negrocrat August 24, 2016 at 7:18 am

    Mr.Austin, would you lend money to someone without a stable job, knowing that you could loose that money?
    Let Donville and friends stop taxing the economy to a standstill, then the banks would be willing as people would be able to find jobs and support the business sector.


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