The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian microfinance lender is aiming to progress his entrepreneur/start-up clients through the developmental stages necessary to transform them into “A1 rated companies”, creating loan products for small and medium-sized enterprises (SMEs).

Ethan Quant, president and chief executive of Progressive Consumer Services, told Tribune Business that apart from targeting 1,000 microfinance accounts within 21 months, his firm would also use that time to develop lending products geared specifically to SMEs.

While microfinance loans typically involve sums ranging from $500 to $5,000, credit to SMEs usually extends up to $100,000.

Through having SME lending products ready for when Bahamian entrepreneurs ‘graduate’ from microfinance, Progressive is aiming to make their transition to the next level seamless. And, when those entrepreneurs turned SMEs hit the $100,000 ‘credit need’ point, the company will then turn those clients over to the commercial banks.

Mr Quant, in a recent interview with Tribune Business, said: “We do plan on expanding, and as the portfolio grows and clients go through this process, we will be putting together a suite of products for small and medium-sized enterprise lending.

“Some of these microfinance accounts, over the next 21 months, will grow and eventually end up as SMEs.

“When their needs exceed $5,000, we introduce them to SME lending tools and go to the $100,000 mark, by which time hopefully they will be ‘A1 rated’ companies and we can turn them over to the banks.”

Mr Quant has just returned from Barbados, where gave a presentation at Carib Cap II, a programme jointly backed by the Multilateral Investment Fund (MIF), the Caribbean Development Bank, the European Commission and Citi Foundation.

The initiative is designed to boost the capacity of Caribbean microfinance institutions, such as Progressive, to offer products and services demanded by start-ups and entrepreneurs - a vital role, given that access to finance is one of the biggest obstacles faced by Bahamian small businesses.

Speaking to Tribune Business before he left for Barbados, Mr Quant said one of his “pet peeves” was that Bahamian commercial banks lacked a proper mechanism for calculating the lending risk posed by small businesses and entrepreneurs.

Disclosing how Progressive, a five year-old company, ended up focusing on microfinance, he explained: “The reality is that business and entrepreneurship is my passion.

“I’ve always been fascinated with someone who can take an idea and turn it into a profit yielding machine.”

Coming from a banking background, Mr Quant said he and Progressive quickly identified that “there was that gap” in the Bahamian lending market for a true microfinance lender.

The company originally began in 2007 as a mortgage broker, and he added: “We started attracting a lot of self-employed and small business owners, as they did not have time to spend all day in the bank. Through that, we started to build a client base of small business owners.”

As a result, the company became familiar with “a whole host of challenges they were facing”.

In addition, while Progressive does offer a $500 pay day advance loan for persons who are employed, the company found that many entrepreneurs and self-employed people were accessing it for use in financing their business ventures.

“The microfinance product is designed for the self-employed, as we were finding that someone coming in for a pay day loan was using it to finance their operations,” Mr Quant told Tribune Business.

Acknowledging that several entities had attempted microfinance lending in the past, the Progressive president added: “One of my pet peeves with the traditional banking sector is they do not have a proper risk assessment method for small businesses, so it’s very hard to calculate proper risk.”

Acknowledging the relatively high risks associated with microfinance, given that a huge proportion of start-ups failed within their first years, Mr Quant said: “It is a high risk market.

“But without the risk, there’s no reward. And the reward in this is you are empowering people to earn a living and provide for their families.

“Whether by choice or circumstance, over the last four years Bahamians had to turn to entrepreneurship to make ends meet.”

Mr Quant added his voice to those calling for legislation to be enacted “that supports and encourages the growth and development of small and medium-sized businesses”.

The Government has pledged to bring the Small and Medium-Sized Business Development Bill to Parliament by January 2013 at latest, and Mr Quant said the proper support infrastructure would have helped his business in its formative years, possibly even avoiding several mistakes.

“This is our fifth year and it’s been a tough five years. I’ve learnt a lot of lessons,” Mr Quant told Tribune Business.