ON THE LEFT: Access to finance a challenge
Î think the bottom line for most of us is when we go to financial institutions like banks is ‘do you have the money I want? Can I get it?’
I think that is what a lot of small businesses face. They are not necessarily set up, or structured or geared in thinking in terms of how financial institutions demand that they provide information.
So access to finance and capital in effect becomes an extremely difficult thing for them. Moreso lending within the region is collateral based and you don’t have the assets for it and a lot of times it’s impossible for you to access the financing, but moreso I think because a lot of times a lot of the small businesses and enterprises within the region are not structured, they haven’t set themselves up, to take advantage of the financial opportunities that are presented.
Barbados may be an exception, but a lot of small businesses still try to duck behind the tax man, so they don’t want to register their businesses, they try to leave it in their own names and they have an operating name, two different things.
And so for us at Caribbean Export we try to deal with that through innovative ways. We are not a financing institution but we have always been thought of and sought after within the region to provide financing for enterprises.
At Caribbean Export, we have a very differentiated approach in terms of how we finance companies and what we are willing to work with.
What we have found is that we absorb a lot of the risk that normally you would not find with financial institutions.
For you to be able to access the finance you must be prepared to present and put forward a lot of information and if your company is set up and operating but you don’t have business plans, you are not maintaining your financial statements then it is very difficult for us to really say you are a legitimate enterprise from the position that we need to ensure that if there is a risk situation that we can recoup any potential losses.
We also provide funding for participation in export promotion activities.
Those are not necessarily given to firms directly but are financed as part of broader activities that we host either directly from Caribbean Export or through any of the business support organisations across the region.
When we talk about collateral-based lending in the region, one of the things that has begun to emerge is the identification of intellectual property assets as assets that could be used to secure against loans.
In Jamaica they have actually passed legislation, I believe, that allows for this to now happen.
For a lot of people the brands that they have have no value added and ability to trade, but in an international marketplace, and in a globally competitive environment where you are not able to trade on volume and low prices, what we are increasingly recognising is that strength in brand value perception, and hence in your intellectual property assets is definitely an approach that we need to take to get firms into market.
• David Gomez is Caribbean Export Development Agency’s manager, trade and export development.