If your business is classified as micro, small or medium borrowing from traditional lending institutions within the Eastern Caribbean financial space is a challenge to say the least.
Now the Eastern Caribbean Central Bank (ECCB) has devised a scheme that seeks to open the doors to easier lending for small enterprises through the Eastern Caribbean partial Credit Guarantee.
Sixteen lending institutions including traditional banks, development banks and credit unions have signed on to this scheme that provides a third party guarantee for loans to small businesses.
The guarantees are being provided by the Eastern Caribbean partial Credit Guarantee, an agency of the ECCB and is endorsed by the World Bank.
Small businesses account for 50% of the GDP across the economic space but that sector has struggled to get access to financing from traditional lenders and some may say that it’s strength in pushing development has never been truly acknowledged by the money powers.
Depending on the size of a business they could find themselves locked out from access to any kind of substantial financing to fuel their growth.
The scheme offers guarantees for three categories of borrowing. Start-up businesses that can be guaranteed up to 80 percent, with a maximum lending amount of $100, 000.
Established businesses can access up to $200, 000 and $300, 000 for expansion and operational costs. Borrowers are required to provide equity and collateral up to 20 percent.
In St George’s this week, Republic Bank, one of the participating lending institutions within the currency union unveiled its suite of credit products tailored for micro, small and medium businesses.
General Manager – Credit Republic Bank, Kalawatee Bickramsingh said the guarantee scheme falls under the bank’s commitment to the principles of responsible banking.
She said Republic will also be launching a lending programme for women in the small business sector that will also benefit from the partial guarantee offering.
CEO of the Eastern Caribbean Partial Credit Guarantee Corporation, Carmen Gomez-Trigg unveiled aspects of the new scheme during a forum in St George’s hosted by Republic Bank Grenada, as one of the participating banks.
The CEO explained that both profit-oriented businesses and not-for-profit organisations can apply.
The partial loan guarantee scheme also has a seasonal repayment structure designed to accommodate businesses operating in the tourism and agriculture sectors whose cash flow is seasonal.
Enterprises with an annual revenue of under $2 million dollars and less than 50 employees and up to 25 percent equity, are able to apply for up to $300, 000 from any participating lender, for working capital with a 75 percent guarantee.
A second category of borrowing allows micro, small and medium businesses to apply for $200, 000 with an 80 percent guarantee, while start-up enterprises can access up to $100, 000.
All applicants must provide equity and collateral for the balance of the amount requested.
Eligibility is based on character, capacity to repay, equity, ability to provide partial collateral and over economic conditions impacting on the business.
The start-up guarantee facility was created as a response to economic conditions brought on by the COVID-19 pandemic.
Gomez-Trigg said many new businesses have arisen out of the pandemic and they decided to implement the facility for a period of one year – March 2021 to March 2022 – on a trial basis.
If it does well the guarantee facility for start-ups can be extended.