The issue of access to finance by small businesses has been a matter of public conversation in recent weeks. The national discussion has been elevated following the recent launch of the European Union’s ‘Bridge’ Grant programme to support green transition and digital transformation projects presented by small and medium enterprises. The structure of the grants programme is unlike the many calls for proposals of the recent past. No longer will SMEs be able to access 100 per cent funding but qualifying applicants will receive up to 60 per cent of project costs as grant funding and must provide the remaining 40 per cent themselves.
While this design is meant to encourage accountability and shared investment, it has created a serious barrier for many otherwise promising enterprises. For a micro or small business, securing the remaining 40 per cent can be near impossible without resorting to high-interest loans, personal savings, or informal borrowing, each of which carries significant financial risk.
This new structure has been described by many small firms as further compounding the access to finance issues experienced by the sector with the traditional financial providers. Where many international and regional programmes previously offered full or near-full grant support for approved projects, recent funding rounds have shifted towards co-financing models.
For years, the issue of access to finance has stood as one of the most persistent obstacles facing SMEs in Barbados and across the Caribbean. Despite decades of policy discussions, strategic plans, and new financial products, the lived experience of many small business owners remains the same; it is still extraordinarily difficult to access affordable, timely funding.
A wider regional dilemma
Regionally, SMEs continue to grapple with, arguably, one of the most stubborn barriers to small business growth. From Trinidad and Jamaica to Saint Lucia and Barbados, business owners cite financing as the single greatest obstacle to growth and innovation. The Inter-American Development Bank (IDB) reports that firms across the region face high borrowing costs, limited access to credit, and steep collateral requirements, with 72 per cent of Barbadian firms identifying collateral as a major or very severe obstacle to doing business.
The problem, however, is not uniquely Barbadian. In Jamaica and the Eastern Caribbean, entrepreneurs encounter comparable bottlenecks when seeking commercial loans, often finding that financial institutions prioritise low-risk lending and impose collateral demands that smaller, asset-light firms simply cannot meet. Where some territories have made incremental progress is in the establishment of credit guarantee schemes and dedicated MSME financing facilities, such as Jamaica’s Development Bank and Trinidad and Tobago’s ExporTT and NEDCO initiatives. These mechanisms help de-risk lending for banks and expand financing channels for small businesses, models that Barbados could scale up locally.
The broader challenge, though, is systemic. Grant mechanisms such as the EU’s 60–40 co-financing rule are well-intentioned but mismatched to the financial realities of small enterprises. For many SMEs, having to raise 40 per cent of project costs upfront can mean taking on unsustainable debt or abandoning viable proposals altogether. The issue is not the absence of support, but rather the accessibility of that support.
A more collaborative regional approach could help. By expanding pooled credit guarantees, harmonising SME lending frameworks, and building shared financial literacy programmes, Caribbean economies could begin to close the gap between policy ambition and practical access. The message is clear: improving access to finance must move beyond rhetoric to structural reform, because innovation, entrepreneurship, and competitiveness all depend on it.
Barbados’ reality check
Barbados has made visible progress. The Enterprise Growth Fund Limited (EGFL) continues to provide debt and equity financing to SMEs; the Central Bank of Barbados supports financial inclusion initiatives; and the government recently secured a US$50 million loan from the IDB to expand MSME finance.
However, despite these mechanisms, the impact has been uneven. Many micro businesses, particularly those in retail, hospitality, creative industries, and light manufacturing, remain outside the reach of formal credit. They are too large for microfinance, too small for commercial banking, and too risky for equity investors.
This is why the current co-financing requirement is so problematic: it assumes the existence of a functioning credit ecosystem that, for many SMEs, simply does not exist.
If Barbados is serious about unlocking SME growth, there must be a rethink on the structure and complement of financing tools. Several pragmatic steps could be considered:
Introduce a national co-financing fund — a revolving facility to bridge the percentage funding gap for approved projects, allowing micro and small firms to access full grant potential without incurring high-interest debt.
Expand guarantee schemes — enabling banks to lend smaller sums at manageable risk and including the credit unions in the pool of financing options, to give SMEs access to short-term liquidity for project implementation.
Target flexibility for vulnerable groups — women-led and youth enterprises should qualify for reduced co-financing thresholds or blended finance models combining smaller grants with technical assistance.
Strengthen advisory and mentorship support — pairing funding with financial literacy, business planning, and export readiness training to increase long-term sustainability.
Such reforms would not only help SMEs implement projects but also improve repayment performance, job creation, and productivity, outcomes that benefit the entire economy.
At its core, the question remains: are we moving the needle in improving the access to finance? Progress has been made, yes, but not yet at the scale or inclusiveness required. Financing cannot remain a privilege for those with collateral or cash on hand. It must become a deliberate strategy to empower those who keep the economy moving – small retailers, artisans, service providers, and innovators.
Without addressing the financing gap, innovation and entrepreneurship are stifled, at a time when Barbados needs both. To realise a truly vibrant small business sector, this issue of access to finance must be addressed once and for all. Access to finance should not be another hurdle to jump by aspiring SMEs, it should be the bridge that carries small businesses from survival to sustainability.
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