The Government is expected to offer loans for small businesses start-ups in the next four weeks, Minister of Small Business, Entrepreneurship, and Commerce Dwight Sutherland said today.
The Minister gave the reassurance as he toured Jordan’s Supermarket at Fitts Village, noting that the funding would be available for business start-ups.
“We recognize that people need a start; if you recognize, this Government has started a Trust Loan Fund for small businesses . . . . Most persons are finding it difficult to obtain loans from the commercial banks. So, we have set the policy framework so that small businesses can come and start $5,000 trust loans and that gives you a start,” Sutherland said.
Government is prepared to give borrowing entrepreneurs a six-month grace period upon beginning the repayment of the loan.
“If you borrow $5,000 over a three-year period at an interest rate of five per cent . . . . we [will] give you six months to catch yourself,” he said.
With the interest rate still being finalized, some small business owners could find themselves paying as low as $160 a month.
“So when you have to pay back on a month-to-month basis as low as $160 at a five per cent interest rate or a four per cent interest rate, We have to fix the interest rate; that is why I said four to five per cent and that is what we are looking at,” Sutherland said.
The St George South MP said that if an individual borrows $5, 000 to start up a business the money would allow them to buy the necessary products to sell.
“And if you borrow $5,000 to start your supermarket business, what it gives you is the opportunity to purchase stock. It gives you the opportunity to begin your business,” he added.
Sutherland also noted that obtaining loans was one of the challenges faced by small businesses.
“We find that these are some of the challenges with small businesses in this country and the Government has put plans in place not only for supermarket businesses but for the hairdressers, barbers, mechanics, bodywork men [and] all small businesses,” he said.
“We have put the system in place and the policy initiative so that small businesses in this country can thrive and make commerce in this country and grow the economy,” Sutherland said, adding that the new Barbados Labour Party administration will be taking a bottom-up approach to achieving growth in the economy.
“In the past growth in this economy came from a top-down approach but we are looking at a bottom-up approach. It is no trickle-down effect now. We believe that growth in this country will come through small businesses and hence we have put the Trust Loan in place,” he said.
The Trust Loan Scheme comes as the head of the Small Business Association Dean Straker urged Government to help business overcome obstacles to obtaining credit.
“I would say within four weeks time we intend to be in a position to offer the first loan and indeed it would not be one loan as we know the floodgates will be opened and we will put the necessary infrastructure in place to accommodate people from all trades and all parts of the country,” Sutherland said.
The Loan Scheme will also provide guidance with the implementation of a Financial Literacy Bureau to train small business owners to manage their businesses effectively.
“We are not only providing the loans but we are setting up something called a Financial Literacy Bureau, whereby we teach you how to manage your business, how to market it, how to provide excellent customer care like what we have seen here [at Jordan’s Fitts Village] this morning,” he said.
The Trust Loan Fund will be separate from the Government’s Fund Access, Sutherland explained.
“ We will give you the start of a $5,000 loan and once you establish good credit ratings and you repay then you can get another $5,000 and after that we will graduate you to Fund Access,” he said, adding that another clear difference between the Trust Loan and Fund Access is that the Government-funded loan will require no guarantors.
“We have established the Trust within Fund Access but you do not have to go for any guarantors. Once you have registered your business and we will [even] help you register your business, you come to us we say yes, it is a yes. It is a given once you have an established business or organized business or a registered business owner, a small business or an entrepreneur, you can receive that funding that you need. You don’t need any guarantors or any reference from the bank or state where you are employed. Just a proof of address from the business, which has been registered, and you will get the money,” Sutherland said, adding that the second stage of the Trust Loan Fund is to move towards digital currency.
“We will provide that e-commerce aspect of the business within the next six months. So, we will start and then we will go into the digital currency,” he said.
“We can save a lot of money when you do e-commerce and we have the e-commerce section in the Ministry of Small Business Entrepreneurship and Commerce which is looking at that aspect of the Trust Loan being set up in a reasonable timeframe in the second phase,” Sutherland said.