21st August 2012, St. John’s Antigua- Small businesses are being told loan approvals will be easier for them after the Antigua & Barbuda Credit Guarantee Scheme receive its first cash injection.
The one-year-old scheme received $500,000 around two weeks ago from the Ministry of Finance.
The initiative was first announced last July by Minister of Finance Harold Lovell as part of a government stimulus package.
To date three financial institutions are participating but have yet to be named.
The scheme, run by the Antigua & Barbuda Development Bank (ABDB), aims to make it easier for small businesses to borrow from commercial banks. ABDB will guarantee up to a million dollars in loans combined.
The statutory corporation’s General Manager Don Charles said the guarantees should make banks feel more at ease to lend to small businesses.
“You tend to find that small businesses just trying to get set up are not in a position to make available the kind of collateral that is traditionally required by financial institutions and so the credit guarantee scheme is set up to provide that shortfall in collateral,” said Charles.
Charles added it helps “to make the financial institutions relatively comfortable that the loan is being insured with what they consider tangible guarantees”.
He said he hopes young entrepreneurs make use of the scheme to pursue business in a number of areas.
“It would be nice to see young persons coming up with creative ideas and then they can get the support in generating businesses that are viable,” said Charles.
ABDB will offer guarantees to approved individual loans for up to 80 per cent of any amount up to $50,000.