$50M allocated to help small businesses get loans from commercial banks

Some $50 million in funds will be set aside by the Small Business Bureau (SBB) this year to revive its “Credit Guarantee Scheme” to help Micro, Small and Medium Enterprises (MSMEs) in Guyana access to much-needed funding from commercial banks.

Director of Business and Entrepreneur Development at the Ministry of Tourism, Industry, and Commerce, John Edghill explained that the initiative was implemented under the Guyana Redd+ Investment Fund (GRIF) in 2013.

But after the People’s Progressive Party Civic (PPP/C) demitted office in 2015, the initiative went cold.

Now, heavy focus is being placed on ensuring that MSMEs have the necessary financing along with the needed technical and business skill to reap the benefits of Guyana’s transformation.

Director Edghill explained to the News Room that with the Credit Guarantee Scheme, the SBB will provide collateral (security for repayment of a loan) for MSMEs seeking bank loans up to $30 million.

“When you go into the commercial bank, the first thing they ask you for is your collateral and that is sometimes the most difficult thing a small business can have because they do not have immovable property nor a house so we will now say to the commercial banks, we will foot that particular collateral for them.

“We are basically making that commitment and making that promissory note to the commercial bank to help those businesses develop and expand,” Edghill said.

Thus far, the SBB has partnered with the Guyana Bank For Trade and Industry (GBTI) and Republic Bank. And per the agreement, those two financial institutions have a fixed six per cent interest rate for the repayment of the loan.

“Usually, the interest rate is like nine per cent or more but with this agreement, businesses are essentially saving three percent and are getting that credit backing from the Small Business Bureau,” he noted.

Lack of access to financing remains a huge impediment to micro-businesses seeking to expand or develop further.

But with the availability of credit guarantees such as this, Edghill noted it will alleviate many fears and help resolve reservations commercial banks may have when dealing with the small business community.

Meanwhile, a sum of $300 million has been allocated to the Small Business Development Fund in Budget 2022 with much focus being placed on holistic small business development.

Allocations made in Budget 2022 will allow the government to provide training to numerous small business owners. Efforts are also being made to provide easily accessible markets for the products produced and services offered.