By YOURI KEMP
Tribune Business Reporter
The Small Business Development Centre (SBDC) yesterday said it had secured $52.7m worth of financing for entrepreneurs during its first two years as it seeks to expand initiatives targeting the sector.
Executives with the centre, which has been named the Access Accelerator, said the $55.8m allocated by the Government to supporting micro, small and medium-sized enterprises (MSMEs) during the 2020-2021 fiscal year, will help it to launch the Economic Recovery Programme, Youth Development Fund and the Universal Pre-School Initiative.
With the Government more-than-doubling its funding for the SBDC, Davinia Grant, its executive director, said some $1.5m will go to a Youth Development Fund that aims to combat unemployment among 15-24 year-old Bahamians via a training, networking, mentorship and collaboration platform.
"In 2015, the level of unemployment among Bahamians between the ages of 15-24 was 25 percent. In subsequent years, no less than one-fifth of the youth population has been unemployed. Through our Youth Development Fund, we are betting on young entrepreneurs to tip those scales in another direction," Ms Grant said.
"Youth entrepreneurship deepens human capital attributes like self-reliance and skill development. It offers societal benefits. Entrepreneurs create jobs, increase innovation, raise competition and are responsive to changing economic opportunities and trends. We are betting that success among young entrepreneurs will prove important in driving down youth unemployment."
Meanwhile, the Universal Preschool Initiative will use the previously allocated $1m that is targeted at pre-school entrepreneurs. The initiative will be run in collaboration with the SBDC, the Ministry of Education and the Preschool and Day Care Centre Council.
A further $25m will be made available to the Economic Recovery Programme, which will be a second phase of the Business Continuity Loan initiative that was established to support small businesses and entrepreneurs - and their employees - through the COVID-19 pandemic.
It will target specific industries such as fisheries and farming; Bahamian-owned vacation home rental and small-scale tourism projects; information and communications technology; alternative energy or energy efficiency; the orange economy and manufacturing.
Elsewhere, the existing Disaster Recovery Programme - set up in the wake of Hurricane Dorian - will this budget year provide $5.3m in guaranteed loans and $500,000 in standalone grants to small businesses. It will also be extended for a further fiscal year.
With $50m worth of applications received for the existing Business Continuity Loan initiative, and $37m already approved, a further $15m is being given to new applicants during the 2020-2021 fiscal year.
"We have approved 545 loans under the Business Continuity programme," Ms Grant said. "There are about 1,500 persons who have already applied for that, but they haven’t been approved yet because of the pause that happened with the programme. That programme will open up to allow those individuals to continue their applications on Thursday, and so we’re pretty happy about that.
"Just under $38m has been spent in that programme. Going forward, the Government has set aside an additional $55m as well as the economic recovery programmes that we have spoken of earlier.
"That’s also another form of business continuity, but it has a specific sector focus in the areas the deputy prime minister mentioned, and that is about $25m. So, it’s about $35m that together in the different programmes will be able to support business continuity.”
Ms Grant said the repayment start date for loans provided under the Business Continuity Loan initiative had been extended from a four-month deferral from the date it was provided to January 31.
“These loans would have started in March, I believe, and so whenever a new loan came on and, yes, the initial period was a four-month deferral," she added. "However, because of the protracted condition of the economy we have pushed all start dates to January 31.
"So the deferral period for repayment, the grace period, has been extended for all of the loans, or all of the loans where the business wish to defer, let’s put it that way. They have the option to not start the repayment until January 31.
"We are hoping that this is not the reality for most of the businesses. These loans were booked in traditional form with traditional expectations, and the financial institutions would have made it clear to those entrepreneurs exactly what they were getting into in terms of those loans," Ms Grant added.
"So it is our hope that if entrepreneurs need additional advising, additional assistance with strategising how they can pull things together to be able to be in place to repay those loans come January, all of the services of the SBDC are available to them.
"I would advise that if you foresee a challenge for January 31, not to wait until January 31 to reach out to us. So if Christmas for some reason doesn’t provide a boost as it did in the past, please reach out to us so we can help you strategize going forward.”
Ms Grant also warned that loans businesses took out with the banks through the SBDC had a clause attached to them that stated, in the event of a default, the bank will report that to the upcoming credit bureau and this will “follow you” for the rest of the firm's existence.
K Peter Turnquest, deputy prime minister, responding to questions about the level of aid provided to businesses during the COVID-19 pandemic, said: “The Government has had two programmes in place since the beginning of this pandemic. One was for a direct contributions credit, and then the other was a tax programme where we deferred taxes.
"Fifty percent of your taxes could be deferred, and you can get an actual credit, meaning that you don’t have to actually pay the other 50 percent of those taxes. We also had a programme where businesses could qualify for loans up to $20,000 during that period.”
Mr Turnquest added: “The whole idea behind those programmes was to ensure that we maintain as much employment as possible. The programme was tied to the level of employees retained. For small businesses, 51 percent of the employees should be retained, and for large businesses, 80 percent of the employees should be retained.
"We also capped what that credit amount, or the deferral amount, could be. Those programmes are very significant in assisting a number of our businesses in being able to bridge this very difficult time. So far for this fiscal year starting in July we have spent approximately $20m on this programme.”
Geoff Andrews, the SBDC's chairman, added: “To date, the Access Accelerator together with the Over-The-Hill programme, the Hurricane Dorian disaster recovery programme, the Grand Bahama Office of the Prime Minister’s technical assistance programme, and the business continuity progamme spurred by the COVID-19 pandemic, we have secured a total of $52.7m for 962 micro, small and medium-sized enterprises in The Bahamas. The money was secured in grants, loans and equity investments.”
He added that the SBDC was exploring crowdfunding opportunities as a means to finance entrepreneurs, and further encouraged the private sector to partner with its efforts.