The decision by some of the country’s commercial banks not to work with the state-run Small Business Bureau (SBB) in pursuit of its Micro and Small Enterprise Development (MSED) programme continues to be a disappointment to the institution but one over which it has no control, Chief Executive Officer Dr Lowell Porter has said.
The MSED programme makes provision for loans of up to $30 million from banks that have signed on to support the programme subject to assessments undertaken by the Bureau to determine whether applying small business owners can qualify for loans before guiding them through the application process. Loan applicants under the MSED project must, however, meet the equity and collateral requirements of the particular financial institution being engaged for the loan. Small business owners who obtain a loan under the MSED project will make re-payments at a reduced interest rate of 6% and will only be required to guarantee 60% of collateral.
Two commercial banks, the Guyana Bank for Trade and Industry and Republic Bank (Guyana) Ltd have signed on to work with clients on the recommendation of the SBB.
However, Porter told a media briefing earlier that the Bureau had “no control” over the banks’ decision-making machinery. He explained that the Bureau customarily assesses the applications of clients to ensure that as far as possible, these are in keeping with the banks’ requirements. However, he stressed that the agency has “zero control” over the final decision. “Once the customer engages the bank, they ask their own questions and make their own decisions,” Porter said.
Meanwhile, Porter has disclosed that applicants seeking loans from those banks currently working with the MSED programme had been subjected to a ‘high rejection rate” insofar as their loan applications are concerned. This, he said, has been the case notwithstanding a repayment delinquency rate of less than ½ percent on loans totaling more than G$1 billion. “We need to ask ourselves why this is so,” Porter said.
Asked to express a view on the reluctance of some commercial banks to work with the MSED programme, Porter said that it may be that some of them are simply not interested in working with government institutions.
Apart from the MSED lending programme through commercial banks, the SBB also offers a grant of up to G$300,000 for start-ups and for enterprises seeking to expand small business operations.