By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
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.”
Comments
TheMadHatter 4 years ago
Yes, your prediction is a potential one - but only because nobody ever knows where the hundreds of millions of dollars in foreign loans upon loans ever goes. Where do hundreds of millions go? Anyone?
In addition, isnt it hilarious that while this PM has not held any Cabinet post (a good thing), esp Min of Finance like his predecessors, that at the same time we just can never seem to have an actual Financial Secretary. It's always some guy from Hollywood, who's "acting".
Porcupine 4 years ago
We are led to believe that the only brains in the world are in business. There are times when business people should defer to those who are experts in a particular field. Making statements such as, only extend it for 14 days, is utterly irresponsible, period. We have been blinded, in one short generation, to believe that business is the pinnacle of human existence. Perhaps this is a time when those with the most money will be unequivocally shown to be those who are most ill-equiped at anything other than personal enrichment and opportunism.
If we truly had political, religious or business "leaders", we would understand that the world we have gotten used to is one of dog eat dog, and is not conducive to true humanity, and certainly not aligned with the misguided Christianity that is practiced in the world today, The Bahamas no exception. The problem is that we have all gotten used to it and cannot imagine a world without business leaders at the forefront of every challenge that pops its' head up. The truly greatest minds are not in business.
John 4 years ago
Was it necessary to extend the lockdown to the smaller and far flung islands of the Bahamas? Most of these islands have small and sparse communities where they are already socially distanced and since mailboats are prohibited from carrying passengers, they are virtually closed communities. As for the small businesses nationwide, yes they are under great strain. Many have hardly been making ends meet before this crisis and when they do reopen the entire tourism sector will still be gone.
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