Barbados is getting a $100 million injection of funding to give micro, small and medium-sized enterprises (MSMEs) a major financial boost.
The Inter-American Development Bank (IDB) said a loan of that amount was being made to the Central Bank of Barbados in the latest round of support for the monetary authority’s Enhanced Credit Guarantee Fund (ECGF).
At an ECGF-related round table involving himself and IDB president Ilan Goldfajn last December in Barbados, Central Bank Governor Dr Kevin Greenidge shared that since its launch in 2015, the fund had approved 326 guarantees totalling more than $130 million from eight participating financial institutions.
The IDB said the new $100 million loan programme, supported under its Flexible Financing Facility, aims to stimulate productive investments across the MSME sector and is expected to benefit 188 companies directly and other suppliers and partners indirectly, and increase economic activity.
It also noted that the funding will be used to provide loan guarantees through eligible financial intermediaries, enabling MSMEs to invest in areas such as property, facilities and equipment, infrastructure, and the adoption of new technologies, techniques or processes.
“This loan represents the third of a successful series of projects which has so far helped extend credit to over 170 unique MSME beneficiaries,” the bank said.
“MSMEs represent over 90 per cent of formal businesses in Barbados and contribute nearly 60 per cent of private-sector employment. However, many face challenges accessing affordable credit.”
It added: “By reducing the perceived credit risk, the IDB-backed guarantees will allow lenders to offer more competitive interest rates and improved repayment terms. The guarantees will cover up to 80 per cent of a loan, with a maximum of [$2 million] per loan.
“The programme also targets underserved segments,
including women-owned or led businesses, exporters, and firms investing in renewable energy, energy efficiency and climate resilience solutions.”
The $100 million loan has a 25-year maturity, a 5.5-year grace period and an interest rate tied to the Secured Overnight Financing Rate.
Greenidge said at the round table that the IDB’s assistance has contributed to MSMEs’ productive business investments in Barbados by helping them to secure financing from domestic financial institutions.
He explained that the first round of IDB loan funding in 2015 was to boost their productivity and competitiveness via the Access to Credit for Productivity Project.
The second loan programme, the Global Programme for Safeguarding the Productive Sectors and Employment, in 2021, “built on the momentum of the first by providing collateral support to MSMEs seeking financing during the COVID-19 pandemic period, primarily for shortterm working capital needs and medium-term productive business investments”, Greenidge noted.
Details on the success of these programmes were shared in the Central Bank’s 2024 Annual Report.
The institution said the funding related to productivity and competitiveness was fully disbursed. By the end of last year, 41 guarantees remained outstanding, with a maximum liability of $22.4 million.
The COVID-19-related support continued to record high demand during last year, the Central Bank said.
“Six participating financial institutions accessed the programme seeking partial guarantees for loans provided to 47 small- and mediumsized businesses. By year-end, the programme had approved and fully disbursed 54 guarantees totalling $27.6 million,” it reported. ( SC)
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