Sitting left to right: Peter Odle, Chairman of The Mango Bay Group, Eduardo Sierra, IDB Team Leader , and Ian Collymore, Project Coordinator, Central Bank of Barbados; Standing: Meryl Stoute, Team Leader of RBC’s Business Banking and Ian Knight, IDB External Consultant
RBC Royal Bank and First Citizens Bank are the first financial institutions to use the new and improved Enhanced Credit Guarantee Fund , which is projected to benefit over 200 businesses.
The Enhanced Credit Guarantee Fund is an innovative financial tool created to assist small and medium enterprises. It is backed by a BDS$70 million loan financed by the Inter-American Development Bank (IDB) and executed by the Central Bank of Barbados.
Incorporated business entities from any sector can use the fund to guarantee up to 80% of their loan and up to a maximum of BDS$2 million per guarantee. The fund can be used to finance the purchase of land and buildings, equipment and machinery; the expansion and improvement of infrastructure; the implementation of new technology, techniques and processes; and to increase permanent working capital, which is tied to an investment operation.
RBC Royal Bank’s client, prominent hotelier, and businessman Peter Odle, Chairman of The Mango Bay Group said that he was “ blown away” by the swift turnaround time from application to approval of the loan. “The Mango Bay Group’s loan is to retrofit the company’s newest hotel property, The Sands, with a photovoltaic electrical system. I truthfully thought that it would take forever to get the loan when I applied, however, in two days I heard back from RBC with the good news. More people need to know about this facility because until the bank recommended it to me, I had no idea that it existed,” Odle said.
He further added, “At the start of this project, when we found out that we had to do the PV system separately, I said I didn’t know if it was going to happen because I didn’t know where we were going to get the funding for a renewable energy investment. Even though there is a lot of equity in the project, because one bank has its security, they are not prepared to take anybody as a co-broker. It truly becomes a nightmare raising additional funds for this investment, so the Enhanced Credit Guarantee Fund is a Godsend,” said Odle.
Meryl Stoute, Team Leader of RBC’s Business Banking, commended the IDB and the Central Bank on the execution of the Fund. “Having the guarantees done this way where the financial institutions have the ability to do the approval on our own, you all having the confidence in the financial institutions that we know what we are doing as well as the process now being facilitated via a new on-line technology where we could just sit down, insert the information and send it off, are major plusses for the Fund,” Stoute said.
Stoute further added that RBC appreciates the improvement to the structure of the guarantee when compared to former guarantee schemes. “The Enhanced Guarantee is structured so that the financial institution gets back technically the 100% of the 80% that is guaranteed which gives us more confidence because before there were issues as to what happens so we are a lot more comfortable with this guarantee. We want to thank the IDB and the Central Bank for coming together and pulling this through. Hopefully, with what we are doing now people would see that it is accessible, and hopefully, that adds to more development and more use of the guarantee,” said Stoute.
IDB Team Leader Eduardo Sierra thanked Stoute for being a trailblazer of the Fund. He said that in the initial stage that word of mouth endorsement will be very important to the program. “We are delighted with the positive feedback from both RBC and your client. Your endorsement is critical at this stage as it creates confidence in the Program. Confidence that the guarantee fund is going to work and it is fast and reliable for the SMEs, beneficiaries and the banks. It is important to spread this message,” said Sierra.
Sierra said that the Fund is expected to be executed for another four years with the IDB provision. “We have many businesses to support in Barbados as we have the goal of reaching more than 200 businesses during the Program execution.”
Ian Collymore, the Project Coordinator, said that the approval of the guarantees was virtually automatic as the Central Bank relied on the financial institutions to do the necessary due diligence on their clients. “The application and approval systems are all online, and as long as all the necessary information is submitted by the financial institutions, the approval is done very swiftly.” Collymore further added that the Central Bank provides a variety of facilities to support businesses as it recognizes the importance of sustainable business to the development and growth of the economy.
First Citizens on board The Enhanced Credit Guarantee Fund
First Citizens Bank has joined RBC as being a pioneer of the Fund. Senior Manager at First Citizens, Kaye – Anne Brathwaite said the Bank is always looking for ways to help its customers. “At First Citizens, we put the customer first, we saw that the Enhanced Credit Guarantee Fund had the potential to help some of our small business clients. We are very pleased with the system as it is very straight forward and being online, we are just required to enter the information. I am particularly satisfied with the fast turnaround time for the loan approval, it’s fast, transparent and easy to register,” said Brathwaite.
Rene Wade, Managing Director of Motofitt Inc. is First Citizens Bank’s first client to receive a loan using the fund as collateral. Wade said that he was shocked at the speed of the entire process, from application to approval. “My business was in operation for two to three years, but it was last year that I decided to take it on full time. The demand was there for more specialized vehicles especially by expats and persons new to the island. To purchase the fleet of vehicles to adequately service clients, I needed a loan. This was the first time I was trying to get a corporate loan. Before I got personal loans to back my business and it was hard getting some bankers to understand and share your vision, even the bank you use. First Citizens made it easy. On my side, it was just getting everything together that they needed. Once I had everything finalized, I received a decision within the first week,” Wade said. In addition, First Citizens has facilitated Motofitt Inc. with an overdraft facility to ensure its sustainability and to assist it with its day-to-day operating needs.
First Citizens’ Lending Officer, Omolara De Riggs-Morris admitted that it is sometimes harder for some SMEs to get loans because they often lack the collateral required by the financial institutions. She said the fund would make applying for loans easier for this group. “In Wade’s case, he had very good accounting information, so the process was easy. Small businesses need to maintain proper accounting records because this is one of their primary requirements when applying for a loan,” De Riggs-Morris said.
IDB Team Leader Eduardo Sierra said that all financial institutions could participate in the fund. “We launched this fund in February, and there has been skepticism by the financial institutions emerging from their previous experience with other guarantee schemes. We are, however, pleased that First Citizens and RBC have placed their customer’s interest first and have used the fund, which will help to improve productivity, employment, and the economy of Barbados. We would like to commend these two financial institutions for leading the way to empower the business and entrepreneurial community,” Sierra said.