Crowd funding needs to be explored to fill SME funding gap
NASSAU, BAHAMAS — A small businesses advocate has bemoaned the lack of national policy and legislation geared toward small business lending in The Bahamas.
Mark Turnquest, principal of Mark A Turnquest Consulting told Eyewitness News Onlinegovernment should seek to legitimize and promote crowdfunding as a means of closing the funding gap for small businesses. The Inter-American Development Bank (IDB) recently revealed that The Bahamas faces a $180 million finance gap in providing capital to small businesses.
Prime Minister Dr. Hubert Minnis on Sunday announced that a $10 million loan guarantee and equity financing program will be established through which Bahamian small and medium sized businesses can secure up to $500,000 in financing under the government program to fund the restoration of businesses or the creation of new businesses.
Dr. Minnis also stated that a business assistance one-stop shop will also be created in Grand Bahama and Abaco to house representatives of SBDC, Bahamas Investment Authority, Ministry of Finance, Dept. of Inland Revenue, Dept. Environmental Health & building permits unit of various agencies. Additionally, East GB and the Abacos will be extended the bonded items facility similar to The GB Port Authority.
Turnquest said, “Once they are finished with the infrastructure on the city of Abaco and Grand Bahama they can try to get a diversity of new businesses to complement the existing businesses. There should be some incentives to develop innovative new businesses that would be complimentary of existing businesses.”
Turnquest suggested that the $10 million loan facility offered by the government may not be enough.
“My recommendation would be to legitimize and promote crowdfunding,” he said.
“At the end of the day the government is going to run out of money to assist these businesses. Let’s supposed sixty companies want funding. They don’t have enough money for that.”
Turnquest bemoaned the absence of policies and legislation to ensure small businesses receive relief following natural disasters and during recessions.
“The government has to enact the policies and legislation. There is no Small Business Act, there is no national policy and thus no bank or lending agency has any commitment to actually bring relief via a strategic approach in times like these,” he said.
“Government has to foot the bill ultimately. Banks have strategy for consumer and retail segments, not small businesses. That’s how I see it.”
Turnquest added, “There is no motivation from banks to look at any legislation or Act to refer to. In the Small Business Act there is supposed to be incentives for SME’s during recessions and after hurricanes. There should be a certain amount of money allocated and certain procedure for the banks to relax what their loan payments from small businesses and also to assist small businesses with recovery efforts. The banks nor the government have any type of commitment to develop small businesses in the country hence things like recessions and hurricanes present all sort of red tape to get some sort of relief. The challenge is there are ad hoc policies that are not focused on the majority of businesses in the country which are small businesses.”
According to Turnquest, in order for banks to truly focus on assisting small businesses there needs to be a clear definition on what a small business is.
“The SME Act is supposed to distinguish between micro- small and medium sized businesses. They are different and have different needs, wants and expectations. They can’t be placed in the same group. Banks have no commitment to satisfying any small businesses because there is no philosophy geared towards helping small businesses.
Turnquest said, “The government has to enact the policies and legislation. There is no Small Business Act, there is no national policy and thus no bank or lending agency has any commitment to actually bring relief via a strategic approach in times like these.”