Funding boost for small businesses

Small and medium-sized businesses in Barbados are set to receive a significant boost through a $50 million Enhanced Credit Guarantee Fund (ECGF) announced by the Central Bank of Barbados in partnership with the Inter-American Development Bank (IDB). 

Unveiled during a roundtable discussion on Friday, this marks the third phase of funding within the initiative and aims to strengthen access to financing for micro, small, and medium-sized enterprises (MSMEs), further addressing barriers that have been hindering sustainable growth.

Speaking at the event, Central Bank Governor Dr Kevin Greenidge noted that since its launch in 2015, the ECGF has facilitated over $65 million in loans through 326 approved guarantees, supporting businesses across various sectors.

Describing MSME’s as “the backbone of any economy,” he said, “These are businesses whose livelihoods and their families depend on them, and so this help is extremely important.”

“With the support of the IDB, many of these institutions have been able to traverse and overcome barriers to financing.”

The new $50 million funding is expected to build on the success of two previous phases which saw $35 million in 2015 and $30 million during the COVID-19 pandemic. 

Greenidge noted that the third phase will focus on critical areas, including export readiness, diversification, food security, and climate adaptation, also seeking to increase participation from female-owned businesses and those led by individuals with disabilities.

The CB Governer added that under the ECGF, guarantees of up to 80 per cent of the total loan amount are issued allowing businesses to secure necessary funding to progress with their projects.

Renewable energy, which accounted for a third of the guarantees under the previous programme, is also expected to receive additional support in this phase.

“This third round of funding is a lot of support for micro, small, and medium-sized enterprises in Barbados,” Greenidge noted. 

“It will help expand our focus on export readiness, diversification, and renewable energy, among other priorities.”

President of the IDB, Ilan Goldfajn further acknowledged  the economic impact of the programme noting that small businesses represent a large percentage of private sector employment within Barbados. 

He also praised the Central Bank and other financial institutions for bridging the gap by providing monetary solutions to a sector that “doesn’t have enough financing because of its size.”

The roundtable discussion also featured comments from various participating banks and their clients who have benefited from the previous phases of the ECGF. 

They shared that the fund’s impact has been felt across multiple sectors, including the medical field, manufacturing, renewable energy, wholesale, retail, and agri-processing. 

“We love the fund,” said Managing Director of Royal Bank of Canada, Shimon McIntosh. 

“The way it works, having the strength of the IDB backing the Enhanced Central Guarantee Fund has really given banks, and my bank in particular, the confidence in the quality of the collateral.”

He further explained how the fund has helped SMEs: “When you think about an SME that has a good idea, strong cash flows, but no collateral, the Central Bank guarantee comes into play and can get them to the next round, build further capability and capacity, and then enable them to grow from strength to strength, exporting into different markets.”

“Our experience with the fund has been fantastic. I look forward to the next round of $50 million,” McIntosh said.

He also introduced two beneficiaries of the fund during the discussion, FLIJ Enterprises which was able to leverage the ECGF to build a 500-kilowatt solar farm, while Guinea Estates, used the programme to expand the renewable energy component of its plantation. (SM)