A leader of the small business community has expressed delight at the COVID-19 relief measures announced by Prime Minister Mia Mottley during a televised address to the nation on Wednesday night.
In a marathon speech, the Prime Minister outlined a record $2 billion economic plan for the country for the next two years that includes a $20 million Small Business Wage Fund.
This is to be administered by Fund Access for firms too small to be eligible for VAT or VAT refunds, she said.
Mottley revealed that this facility will contribute $500 per month per employee up to five employees, where the employer is registered at the Small Business Association (SBA), the Barbados Revenue Authority (BRA) and the National Insurance Scheme (NIS) or will be so by May 18.
“The firm must commit to holding on to at least 75 per cent of its staff. Fund Access will be responsible for advertising and managing the details of how small and micro businesses access the fund and eligibility within the next seven days,” she said.
Mottley also announced the establishment of a new $40 million VAT Loan Fund for those companies who are registered with, and pay VAT and who can show that their cash flow has been severely disrupted by the pandemic and the measures taken to contain the outbreak.
The Prime Minister disclosed that the fund will offer twelve-month, interest-free loans to help buttress the cash flow of all businesses with a turnover of over $200,000 per year.
She said the amount that may be borrowed by these eligible businesses is half of the amount paid in their last VAT filing and payment before the onset of the pandemic. This fund will be capitalized by taking the money in the Catastrophe Fund that has accumulated over the last 15 years and re-purposing it to avoid insolvency and bankruptcy and further unemployment.
And today, an excited Chief Executive Officer of the SBA Senator Lynette Holder was over the moon, saying the measures demonstrated that the Government has been listening to the cries of the small and micro business sector.
“We are pleased that a number of the recommendations that we had put forward have been favourably considered by the Government. Evidence of what the Prime Minister said. There are three categories that have been addressed of which we are very pleased,” Senator Holder told Barbados TODAY this afternoon.
In identifying the interest-free loan plan, the SBA CEO said her organization has been of the view that in this environment, it made no sense having a mechanism where small and micro-businesses had to pay a lot of interest on it in order to access credit.
“That would put them into even more debt. So the fact that it is an interest-free loan, we are pleased to hear that,” she stressed.
“But the third category which is even more dear to us is that category of businesses that do not pay VAT because they are not VAT registered. They are under the VAT threshold. And we have been lobbying this season that they be treated favourably. Actually, we had put forward $15 million. I am pleased to see that the Prime Minister has been able to find another $5 million and establish a $20 million fund for that group,”
However, she questioned how the $20 million is going to be accessed.
She explained that when the SBA had first lobbied for that, they had hoped the money would have gone to the firm.
Holder declared: “My understanding is that the money is being paid directly to the employee. So my obvious concern now is how is that going to be done. The Prime Minister clearly would not have addressed that yesterday I understand… admittedly so. But as you know, the devil is in the details.
“Whereas the money will go to Fund Access to administer…the firms must be registered with SBA, NIS, BRA…how will the $500 up to five employees be disbursed?
“Our view is that the firm should apply to Fund Access. Demonstrate that they are a member of the association and the other two statutory organizations and the money paid to the firm. But it is my understanding that the monies are going to be paid directly to the employees.”
She also sought to make a case for the employer and other management officials to benefit as well, arguing that they too are employees in their own right.
“The director, the general manager, manager and so on is an employee in his or her own right and therefore should be able to access that $500 as well. So the details now…I know the details have to come as with everything else. So that would be something I would be listening out to hear and to work with the team to work out those logistics,” the SBA boss added.
She also expressed concern regarding the self-employed category, acknowledging that such persons do not benefit from the NIS unemployment payout.
Holder said: “For me, this whole COVID-19 has shown us that we need now to revisit the legislation that governs how the self-employed are treated…because there are over 2,000 self-employed persons registered with National Insurance.
“We are seeing now in a situation like this… and God forbid we have some natural disaster that affects business continuity, they again can be affected, because the law does not provide for an unemployment benefit to them as a self-employed registrant.”
She told Barbados TODAY that going forward, there will have to be dialogue on this issue including the fate of managers who are self-employed but not registered as such.
“So all in all what we heard yesterday is a good start. It has demonstrated that the Government has listened their stakeholders…they have listened to the cries of the private sector and particularly in this case, the micro, small and medium business community to be able to bring to bear these provisions that were announced yesterday,” the SBA CEO said. emmanueljoseph@barbadostoday.bb
