Small businesses await loan guarantee lift
- 'We're talking,' says Nadir
By Nicosia Smith
Stabroek News
June 18, 2004
Tourism, Industry and Commerce Minister, Manzoor Nadir says the framework for the implementation of the Small Business Act will be in place within two months.
On March 15, Parliament passed the Small Business Bill which allows the government to give loan guarantees to small businesses. It also stipulates that at least 20% of the government's purchases of goods and services must come from these businesses.
The Act will go a long way in helping small business with little or no collateral to access credit.
Minister Nadir told Stabroek Business that consultations are ongoing as to the formation of the various governing bodies stipulated in the Act.
Nadir did not give the names of the individuals or groups being talked to but did note that a few weeks ago consultations were held with the Guyana Small Business Association.
Nadir says the present consultations include discussions on the formation of a Small Business Council(SBC), a Small Business Bureau(SBB) and a Small Business Development Fund(SBDF) to grant loan guarantees.
The SBC is an eleven-member body to supervise and manage the SBB which is its secretariat.
While the council will make recommendations in regards to small and micro- business development, both the SBB and the SBC will oversee the preparation of annual reports on the small business sector.
Nadir said the funds to be designated for the SBDF are also up for discussion.
The Act stipulates that the government must assign funds in its budget for the SBDF which will also be financed by grants. In addition, the SBC and the SBB are to be financed through the SBDF.
The GSBA had previously stated that US$100,000 would be a satisfactory sum to start off the fund taking into consideration its many obligations.
Manjula Bridgemohan, managing director of Small Business Development Finance (SBDF) says although the Act is a good initiative all depends on how effectively it is implemented.
Bridgemohan says once there is objectivity in the loan guarantee process then every eligible applicant should be able to access these guarantees.
The question now will be how the government will implement this Act, she says, noting that the government will "have to have very good planning and co-ordination."
All the stakeholders will have to work together to evaluate Guyana's market potential since there is a relatively small population and a limited market, the managing director noted.
She believes that small businesses will need to be taught competitiveness, better packaging methods and how to produce goods which can gain market share.
In addition, she says that at times small businesses can produce but do not have a good network to supply information on market conditions.
As regards the stipulation which states that the government should procure at least 20% of its goods and services from small businesses, Bridgemohan says it is a very good initiative and this percentage could be increased if small businesses successfully meet the demand.
Presently the Small Business Development Finance is receiving far more applications for financing than they can finance, the managing director says.
"It's a good provision...[and a] good step in developing the micro and small sector," she says, adding that for the small business sector to thrive through this Act, officials will have to be devoted to its development.
Nadir, in March, had stated that the SBDF is not a loan scheme and is only stipulated to provide loan guarantees for businesses which apply to financial institutions for loans but do not have the required security.
Businesses will be eligible to receive loan guarantees if they have less than 25 employees and their gross annual revenue is not more than $60M or their total assets amount to not more than $20M.