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Aid for self-employed, entrepreneurs – PM Mottley

by Barbados Today
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Self-employed people and small businesses are set to receive a lifeline from Government, Prime Minister Mia Mottley told the nation tonight

She announced three key programmes aimed at helping businesses stay afloat as the country faces the economic fallout of the COVID-19 pandemic.

Among the initiatives is a one-time Business Cessation Benefit. The National Insurance Scheme (NIS) is to cut a $1,500 cheque for this month and next month only, she said.

There has been a strong outcry from self-employed people for help since they are not entitled to NIS benefits. Their cries were echoed by Ryan Walter, the Democratic Labour Party’s spokesman on business. On April 17, he called on Government to roll out a small business rescue package.

The Prime Minister said that while self-employed people did not qualify for NIS benefits, they, too, were suffering.

Mottley said: “Self-employed people who make contributions to the NIS are not entitled to unemployment benefits under the law as it stands now. While there are genuine practical challenges to providing unemployment benefits to a self-employed person, there is also a real need. There are too many who are now suffering. We care for all.

“We will now launch a new one- time Business Cessation Benefit for the self-employed of $1,500 per month for each of April and May only.

‘So that those persons who have paid NIS as self-employed, and there are just under 2 800 persons who have, will now be entitled to draw $1,500 for April and $1,500 at the end of the month of May.”

Mottley explained that the benefit will cost the NIS $8.5 million and will be paid out of Government’s financing of NIS liquidity over the course of the next few weeks.

The Prime Minister also announced a new $40 million VAT Loan Fund for those companies which are registered with and pay VAT and who can show that their cashflow has been severely disrupted by the pandemic and the measures taken to contain the outbreak.

She said: “This Loan Fund will offer 12-month, interest-free loans to help buttress the cash flow such that you can get through this difficult period. Who is entitled? Persons who are genuinely registered with VAT or companies whose turnover is over $200,000 per year.

“The amount that may be borrowed by these eligible businesses is 50 per cent- half – of the amount paid in their last VAT filing before the onset of the pandemic.

This fund, Mottley explained, will be capitalised by taking the money in the Catastrophe Fund that has accumulated over the last 15 years. This will require legislative requirements which Government will undertake urgently.

The Prime Minister said: “We will seek to repurpose it to avoid insolvency and bankruptcy by too many of our companies and as a result further unemployment. I want to reassure the people it is that these funds are most needed now.

‘While the original intention was for the Catastrophe Fund was to assist us in a natural disaster catastrophe, we believe that we are now facing our greatest catastrophe in the modern history of our country and our region, in the world since World War II.

“In simple terms should a tropical storm or hurricane greater than the strength of tropical storm Kirk from 2018 hit us we would be able to get $1.7 billion dollars in fiscal space given the deferral of the debt payments that are provided for in this natural disaster clause.

“Our Government believes that the greatest use of those funds in a Catastrophe Fund is to support Barbadian businesses and to keep Barbadians jobs and therefore it makes no sense to keep that $50 million dollars in the Catastrophe Fund when it is needed to keep the heads of people and businesses above water.”

Eligible firms must maintain at least 75 per cent of their normal staff levels. There is a Special Project Unit being established in BRA to help better manage the payment of the refunds owed and also to manage the applications to the $40 million dollar loan facility, according to the Prime Minister.

One other major initiative outlined by Mottley, was the establishment of a $20 million Small Business Wage Fund, to be administered by Fund Access for firms considered too small to be eligible for VAT or VAT refunds.

Mottley said: “We are talking here about micro and small businesses. This Fund that we are establishing will now contribute $500 per month per employee up to five employees, where the employer is registered at the SBA, the BRA, and the NIS and if you are not registered with them you need to do so before the 18th of May in order to be eligible. In short you will be able to get $2,500 a month for two months to assist with your payment of wages.”

The firm must commit to holding on to at least 75 per cent of its staff. The Prime Minister said that Fund Access has been told to have an open approach. They are responsible for advertising and managing details, along with the Small Business Association on how businesses will be able to access the fund.

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