By NEIL HARTNELL
Tribune Business Editor
Some 30 percent of small businesses will “automatically” close if the government extends the nationwide COVID-19 lockdown for another month, a consultant to the sector warned yesterday.
Mark A Turnquest, principal of Mark A Turnquest Consulting, told Tribune Business that the government should only extend it for “14 days at the most” beyond the present month’s end expiration if it is to prevent the loss of almost one-third of this sector.
With the House of Assembly set to debate a potential 30-day extension to the lockdown, which would see it last until the end of April, Mr Turnquest said that while the launch of the government’s $20m Business Continuity Loan initiative would aid some “you cannot borrow your way into business”.
He added that micro, small and medium-sized enterprises (MSMEs) that apply for the initiative will need “every single one” of the four months permitted as a grace period before the loans - carrying interest at five percent - have to be repaid given how long the COVID-19 fall-out is likely to last.
“At least 30 percent of them will go out of business with no recovery,” Mr Turnquest told this newspaper, when asked the likely consequences for MSMEs if the government extends the nationwide lockdown to end-April.
“It’s going to be very devastating. I would advise the government if they have to do it, if they must do it, that it be 14 days at the most. I’d advise the government to look carefully at the pros and cons, 30 days and 14 days, but they can evaluate it after 14 days. It’s a safety and economic decision, but on the ground it’s very difficult. People are hurting.”
Mr Turnquest said his small business clients were split 50/50 over whether they will take advantage of, and apply, for financial assistance via the government’s Business Continuity Loan initiative.
He explained: “A loan is not a replacement for sales. If you are in business and you lose your clientele, a loan is not going to save you. You cannot stay in business with a loan. You only get a bunch of principal and interest expense with a loan, and will still go under at the end of the day.
“You cannot borrow your way into business. You need customers, otherwise you have a loan on your hands that you have to pay.”
Still, Mr Turnquest praised the Business Continuity Loan programme’s launch as “a good start”, while reiterating that it should be expanded to at least $50m given the likely depth of the recession facing the Bahamian economy.
Describing the application as a “simple process” after trying it himself, he added that the Small Business Development Centre (SBDC) had adjusted it following his advice after discovering that it only accepted 10-figure Taxpayer Identification Numbers (TINs) and not nine-figure ones.
“The process is straightforward,” Mr Turnquest added. “The only problem is a lot of the things they’re asking for are at work, not at home, and you cannot go to work because it’s been closed by the lockdown. It’s a challenge for a lot of businesses. They have to go on the road and get the information from the office.”
Marlon Johnson, the Ministry of Finance’s acting financial secretary, told Tribune Business that the Government was expecting “significant” demand for the Business Continuity Loan initiative after 25 applications were received in the first three hours yesterday following its launch.
He added that “the ambition” is for successful applicants to receive the funds within five working days, with the application process taking three and the disbursement of funding a further two.
“Our target is five working days,” Mr Johnson said. “We recognise businesses need those funds quickly so will do our best to stick within that five-day window. For those who have worked with the banking system, that’s remarkable alacrity.”