NASSAU, BAHAMAS — A recently released Inter-American Development Bank (IDB) report has revealed that within the region, The Bahamas had the highest percentage of women-owned firms (WOF) which cited “complex applications procedures” as the reason not to apply for a loan.
The report titled “Finance for Firms: Options for Improving Access and Inclusion”, compared the financial systems of six Caribbean countries—The Bahamas, Barbados, Guyana, Jamaica, Suriname, and Trinidad and Tobago—to others from across the world. It also assessed the results of enterprise surveys in 2014 and 2020 to identify key financing challenges faced by firms, including small enterprises as well as those owned or operated by women.
The report noted that high-interest rates were reported as the main reason why WOFs decide not to apply for loans (31 percent, on average), with the highest level in Trinidad and Tobago (42 percent). Other reasons included the collateral required, the size of the loan, and insufficient maturity.
Across the region, approximately 11 percent of WOFs cited collateral requirements as the reason for not applying for a loan and seven percent of WOFs noted that the size of the loan and maturity were insufficient. The countries where more WOFs cite the cost of finance as a major obstacle to business (relative to other firms) including Guyana, Jamaica, and The Bahamas.
“Complex application processes are mentioned by five percent of WOFs as a reason not to apply for a loan. However, there are within-region differences: The Bahamas had the highest percentage of respondents citing complex application procedures among WOFs (14 percent),” the report noted.
The report further noted that survey evidence suggested that women-owned and women-led firms face greater financial constraints than other firms.
“Over the last 20 years, WOFs report having accessed approximately 20 percent of the volume of all short-term credit granted, defined as loans with maturity less than three years. This is consistent with the share of these types of companies in the Caribbean and includes lines of credit, overdraft facilities, and credit cards. However, WOF s only accessed 1.3 percent of medium – to – long-term loans (by volume) granted in the same period. Loans allocated to these firms are also of lesser value, on average than those allocated to other companies. The average size of a short-term loan granted to WOFs was US$ 163,497. This amount lags the average granted to other firms of US$215,227. However, this difference can be partially explained by the fact that WOF s in the sample are about half as large, on average, in terms of the number of employees. That said, in terms of medium – to – long-term loans the average loan size was about one-tenth the value (US$156,178) for WOF s than for other firms (US$1.54 million) — something that cannot be explained by the average number of employees,” the report noted.
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