Cautious creditors

Barbadians are being lot more careful in their borrowing, one of the region’s leading microfinance institutions is reporting.

General Manager of Axcel Finance Barbados Ricky Went told Barbados TODAY while residents were still borrowing for a variety of reasons, they were being more prudent.

And he said his institution was also doing what it could to prevent individuals and small business owners from biting off more than they can chew.

“At the moment we are finding that Barbadians are managing credit very well, because a lot of our loans we do a lot of financial literacy first to ensure that people do not end up in [too much] debt,” said Went.

“Since the recession what we have found is that people are a lot more cautious and all financial institutions will tell you that, but then it means you have to be a lot more prudent and avoid over indebtedness. So we put payment plans in place with people and manage that very well,” he said.

The recently-released Financial Stability Report showed that more credit union members had taken out loans during 2018, resulting in a 4.2 per cent increase in loans from those institutions, when compared to the previous year.

However, this expansion represented the slowest rate of expansion of the credit union loans in the past five years.

Went said he believed it was a similar situation for microfinancing institutions like his, adding that generally people were borrowing to do “big things” and then paying back gradually.

He said people were primarily going to Axcel for medical and education loans and consolidation, but added that Christmas loans, back-to-school and travel loans were also popular.

The company offers a range of individual and microbusiness financing options ranging from as little as $500 up to $15,000.

Went said his company was managing its delinquency rate effectively, but he could not immediately say where the current rate stood.

“Our delinquency rate is probably one of the lowest because we prefer to do a lot of the reviews upfront. If persons have challenges, we give you the kind of loan that meet your needs rather than just giving funds and then finding out that the terms are burdensome for our clients.

“We prefer to give you a smaller loan that you can manage than giving you a lot more. Then of course once you can afford a bigger loan you get that. We prefer to do it right up front and that is how we manage our delinquency,” he explained.

Axcel currently operates in five Caribbean islands – Barbados, Antigua, Grenada, St Lucia and Dominican Republic. Went said the company was looking at expanding its footprint across the region, but those plans were in the very early stages.