By NEIL HARTNELL
Tribune Business Editor
The government was yesterday urged to almost double the small business financing provided in the 2020-2021 budget to $100m, a sector consultant arguing that the planned allocation was "too moderate".
Mark A Turnquest, pictured, of Mark A Turnquest Consulting, told Tribune Business that the $55m made available by the government was "a help but not enough" even though it includes a further $30m for the Business Continuity Loan initiative.
That allocation represents a 150 percent increase on the initial $20m provided to help micro, small and medium-sized businesses ride out the COVID-19 pandemic with a combination of loans and grants. K Peter Turnquest, deputy prime minister, included the new financing - which will take the Business Continuity Loan's coffers to a total $50m - among the 11-fold funding increase he said the government is directing to the sector.
"We set an objective three years ago to build an entrepreneurial ecosystem, and our investments to date have made the environment for entrepreneurship stronger than ever before. We have increased the capital Budget allocation for small business growth and development from $5m last year to $55m in the new Budget," K Peter Turnquest told the House of Assembly.
"We are pleased to see that the entrepreneurial spirit of Bahamians has been awoken, because now people have confidence in the programmes available to support their ambitions." Hailing the Small Business Development Centre's (SBDC) work, he added that it will seek "to leverage the Government's investment" by attracting other forms of financing to the MSME sector such as private equity, angel investing and crowdfunding.
The deputy prime minister also praised Bahamian small businesses for adapting to the COVID-19 pandemic through the launch of new products and services, such as home deliveries, which rental car companies are now providing vehicles for.
"With shifts in manufacturing, the adoption of digital platforms and the growth of delivery services, Bahamians entrepreneurs are innovating to meet the new demands for products and services during this lockdown," K Peter Turnquest added.
However, Mark A Turnquest argued that The Bahamas needed to find at least another $45m from private financiers - both in The Bahamas and internationally - if it is to make a meaningful impact in growing the small business sector and cushion it from COVID-19's economic fall-out.
"It's got to be $100m," he told Tribune Business. "The $55m means they need to get another $45m from the private sector or international investors. That's just moderate; it's moderate at best. It's not enough. It's a help but it's not enough.
"I understand they're broke but it's not enough. The Government have to be creative and innovative to attract crowd funding, foreign investors and the private sector to bring it up to $100m. That's the only way it will be fully effective."
Tribune Business sources, speaking on condition of anonymity, said the wider private sector had also been hoping the Government would allocate at least $100m in the 2020-2021 Budget to supporting MSMEs given its professed recognition of the sector as a key driver of job creation and economic growth.
The issue was also seized upon by Chester Cooper, the Opposition's deputy leader and finance spokesman, who argued that the $55m allocation was "not going to cut it" given that the Inter-American Development Bank (IDB) has identified a $150m to $200m "gap" between available funding resources and the needs of small Bahamian businesses.'
Mark A. Turnquest, meanwhile, told this newspaper that businesses that are totally reliant on walk-in customers, and unable to offer delivery or curb-side pick-up services, will likely struggle to survive the Prime Minister's plan to extend the COVID-19 lockdown until end-June 2020.
Companies without the necessary management systems and controls will also find themselves in trouble, he argued, as his small clients are only enjoying 60 percent of their pre-pandemic sales in offering delivery and curb-side services.
"My small business clients were all over it because things got so tough," Mark A. Turnquest said of the Business Continuity loan initiative. "They looked at the benefits of staying alive over the negatives. At least 30 percent of my clients were successful.
"Twenty-one of my clients got the loan so far. Twelve of them with annual sales under $100,000, and nine over $100,000. The ones under $100,000, they broke off running for that because they needed it. The other nine were reluctant at first but, after a while, they took it and all of them were successful.
"They have Business Licences and receipts to back-up their purchases, spending and operational costs. My other clients, when this next month of shut down hits them, will jump up at that as well."
Mark A. Turnquest added that he had turned to his e-commerce contacts to help his small business clients enter the online ordering/home delivery real. "It's difficult for businesses to keep their sales up by not opening, especially clothing and electronic stores," he disclosed.
"A lot of them are doing curb side, but it involves more work than doing online sales. Right now, what we are doing, is I have assisted them with my e-commerce colleagues, website colleagues, to put a lot of them on online delivery.
"People order online and they deliver the product to them, together with curb side. All of them are operating at 60 percent capacity. That extra 40 percent is traffic through the stores. They're not going out of business. I don't have any clients going out of business, but they have to accept the reality of lower profits."