Small business owners lacking traditional forms of collateral required by commercial banks to access funding may soon have another option.
Minister of Energy, Small Business and Entrepreneurship, Kerrie Symmonds, disclosed today that his Ministry was working on establishing a Collateral Registry to enable small business owners to gain much needed access to financing.
He made this disclosure as he addressed the Small Business Association’s State of the Sector Conference held under the theme: The Era of Digital Disruption: Thinking Outside of the Box, at the Lloyd Erskine Sandiford Centre.
Acknowledging the presence of some lending institutions at the conference, the Minister said one of his “bug bears” was the fact that 95 per cent of loans given in Barbados were backed by land, buildings or relatively new vehicles.
“That doesn’t help the entrepreneur…who wants to start a laundromat, or they have some heavy equipment and want to expand the laundromat and [it] is located on a property that he doesn’t own; the farmer…who has some crops and some livestock, but he is on land that he is leasing, and he doesn’t own it,” Mr. Symmonds pointed out.
He stressed that there were numerous instances where entrepreneurs did not own collateral, but had accounts receivable.
“If you’re a farmer, you have crops and livestock; if you are the hardware operator you have inventory; the mechanic has his equipment. But all of those things, right now, have value. There is no institution in Barbados, that is saying to you: I wish to lend you; I’m prepared to lend you against that value, because we’ve been stuck in the same mode of doing … in the same way for decades,” he lamented.
However, he suggested the concept of a collateral registry would allow people with movable assets for the first time ever in Barbados to be in a position to pledge that asset against a loan and access financing.
Mr. Symmonds challenged the financial institutions to “unleash the power of technology” to empower businesses with the vital financial assistance they required during these difficult times. “We see that there is tremendous potential in the sector…. The pain and suffering in the country must be the engine and the fuel that galvanise us now to do the things to transform this economy in a way that we never did before, even though we all knew that it had to be done…,” he concluded.