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High risk in backing small business loans


rhondathompson, [email protected]

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FINANCIERS DEMAND a proven track record from small businesses because they are risking other people’s money to fund them.That is the reality, accordingto Caribbean Financial Services Corporation president Anthony Maughn, who told BARBADOS BUSINESS AUTHORITY on Friday it was true that lending institutions asked small enterprises for huge amounts of information and they had to be in business three years prior to consideration.“It is true because you are asking a financier to take a risk – and it is not a risk of profit, it is a risk of loss.If the homework is not done by the project sponsor then the financier can’t do that homework.“If they don’t make a good case and I perceive that the risk is higher . . . they are going to pay the price. If I still go ahead, I stand to take a loss. If I stand to take a loss, I will send up the interest rate to cover myself,” he said.He granted the interview after he and nine other representatives of financial institutions listenedto business pitches from small entrepreneurs at a Barbados Investment and Development Corporation-sponsored Investor Readiness: Pitching For Success seminar at Bagnall’s Point Gallery, Pelican Village, The City.Maughn stressed that “financiers are using other people’s money and in using other people’s money, you have to secure it in one form or another”.Another funding representative, Corey Knight, senior relationship officer, corporate and commercial credit at Barbados National Bank, said a three-year track record was “not necessarily set in stone” once the proposed management had experience in another enterprise and was backed by security. (SR)

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