Banks Reluctant To Lend To Barbadian Micro-Businesses

by Amanda Banks, Tax-News.com, London

02 October 2003

Chairman of the Barbados Small Business Association, Senator Sandra Husbands, has criticised many banking institutions for their reluctance to invest in the island's small businesses, an attitude which she says is seriously holding back growth in the sector.

The Senator was reacting to a wave of criticism from business people in the jurisdiction, who complain that lack of access to funds is their largest impediment to growth. Whilst Husbands pointed to the availability of government assistance for small businesses, she acknowledged that there is a gap in funding that should be filled by the private sector.

At a recent meeting of the Rural Development Commission, the Senator observed that: "most financing requires you to have some collateral or security, and although Government has provided the small business credit guarantee scheme to assist... and they have also put in place export guarantee programmes, the banking institutions are reluctant to facilitate the use of these lines of credit."

It is of vital importance to remedy this situation, Husbands explained, as the small business sector is a significant pillar of the Barbadian economy.

"You have close to 11,000 micro businesses in Barbados and if they employ four persons or even two persons, you are talking between 22,000 to 40,000 people; if those businesses were to crash the economy would crash," the Senator warned, adding "at the end of the day, our major challenge is with the people from outside our shores, who want to sell in our market, and we want to be able to penetrate theirs ... so we can only do that by growing businesses that are strong enough to do the type of ‘niche marketing’ that is required."

Recommended