The vehicle is a new $10 million fund, set up by Scotia Bank.
“Banks in the Bahamas have had a bad reputation among small business (owners),” said Clement Foster, manager of the Small Business Division of Scotia Bank (Bahamas) Ltd., who announced the new fund yesterday.
The revelation came at a meeting hosted at the Radisson Cable Beach by the Bahamas Chamber of Commerce, at which Mr. Foster noted that some small business owners have complained that it is easier to finance a new car than to get a bank loan for a small business.
Mr. Foster noted that those entrepreneurs who access the new Scotia Bank fund will have seven years to repay the loan, the first two years of which they would only have to pay the interest – reduced by one percent from the usual interest – and the fees, which for this fund have been slashed by half.
He added that these concessionary rates were accompanied by a guaranteed response time of 10 days, provided the companies seeking the loans supply all the information the bank requests at the time of application.
“Small businesses are the backbone of the (Bahamas) economy,” Mr. Foster insisted.
The fund, to be known as the Scotia Bahamas SME Fund, will provide loans of a minimum of $100,000 to a maximum of $250,000 for small and medium businesses to expand through acquisition of new capital equipment, the reengineering of their processes, upgrading of facilities and modernization of technology, among other things.
“We are not in the business of venture capital,” Mr. Foster warned, pointing out that the fund is not a venture capital fund.
The requirements for a successful application include a proper business plan, meeting the bank’s normal creditworthiness standards and financial statements.
Mr. Foster said the bank would prefer audited financial statements, but as some small businesses may not be able to afford that, the bank will accept accountant-prepared statements.
The stringency of the financial statements requirement, according to Mr. Foster, is to help the bank get a true picture of the capitalization of the business.
“Some small business owners believe that cash flow is profit,” he said.
Scotia Bank also requires a 25 percent equity from the business owner seeking the loan.
Among the types of businesses Scotia is expecting to work with are those focusing on tourism, agriculture and fisheries.
By: Quincy Parker, The Bahama Journal
