Minister Of Energy And Business Senator Lisa Cummins wants a renewed approach to debt financing for micro, small and medium-sized enterprises (MSMEs) and a move away from “outdated models”.
Speaking during yesterday’s IGM 200 Conference – Powering Barbadian Entrepreneurs, held at the Hilton Barbados Resort, Needham’s Point, St Michael, Cummins said banks and other traditional debt financing institutions must make changes if small businesses were to have a chance at being sustainable.
“What we have in traditional banking systems focuses on collateral, not capacity. It prioritises security, which I understand, but it does not do so for sustainability. It traps too many SMEs in short repayment cycles – ten years or 15 years – with front-loaded costs and little breathing space. That’s not patient capital, that’s pressure capital,” she said.
“We have to change this. We need longer terms, longer amortisation and more flexible repayment options. We need to shift from short-term loans to long-term confidence.”
Cummins announced many interventions and directives, some of which were already in play and were aimed at building a market that was investor-friendly and emboldens entrepreneurs.
Among these, she said, would be a restructured FundAccess, placing it as a leading financier for MSMEs and aimed at extended loan terms, strengthening repayment, and building community finance partnerships alongside credit unions and other co-ops. Additionally, there would be the establishment of direct pathways to the commercial banking system, and allowing transition between Trust Loans and FundAccess, she added.
“Those two agencies must have a direct pathway. If I borrow $5 000 from Trust Loans and go back and borrow $10 000, and then I’m looking to borrow another $10 000, how am I starting from scratch from FundAccess? FundAccess equally, alongside with Trust Loans, must create that pathway,” she added.
She said there would also be an engagement between the Cave Hill School of Business and Management and the Barbados Bankers’ Association to ensure a seamless transition from Trust Loans and FundAccess to commercial banks and credit unions.
“My commitment to you, as the representative of the Government here in this room, is that we will continue to work to keep our market credible, agile and investor friendly,” Cummins said. (JRN)
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