SBDC executive director: No guarantee some will not default on loans

Although more than $50 million in government funding has already been disbursed to small and medium-sized businesses since the start of the COVID-19 pandemic, Access Accelerator/Small Business Development Centre (SBDC) Executive Director Davinia Grant said yesterday she could not guarantee that some of those businesses will not default on their loans.

Prime Minister Dr. Hubert Minnis announced last week during Bahamas Business Outlook that as of December 31st, 2020, the SBDC has disbursed $11 million dollars through the Access Accelerator program and $40 million through the Business Continuity program.

Grant said while at the moment there are less than a handful of businesses at risk of defaulting, she cannot promise that next week that will remain the case.

“At this very moment it is still accurate for me to say that we have not had any defaults. We have had persons who are delayed and there are one or two persons who are very near defaulting. I will be very transparent, it was a miracle that so many of them survived the COVID-19 downturn and most of them have been able to re-emerge successfully. There are one or two that we are working with feverishly to try to avoid that position and it may be avoidable, it may not be. We have to take the good with the bad,” she said when she appeared as a guest speaker at a Rotary Club of South East Nassau virtual meeting yesterday.

“Sometimes circumstances change. But we’re still very happy that up until now the program has been very successful in its level of support and we’re also in anticipation of what’s been happening with the economy recently. We’re also looking at beefing up the post-funding support so that we can avoid that type of position. It will not stay this way forever. I will not be able to always say that we have no defaults, I may not be able to say that next week, but at this point I can.”

Not all of the programs funded through the SBDC offer loans that need to be repaid. The government has also, through the SBDC, granted $985,590 to small businesses during the first round of its Standalone Grant Programme.

The prime minister announced last week that a second round of grants, for which $2 million in government funding has been allocated, has been initiated with 3,200 applications.

Pointing to increased local shipping costs as one example, Grant said there are many reasons some clients may be experiencing challenges in their first few months of operating after receiving funding.

“Another part that I’m unfortunately seeing is that there’s a challenge with seeing danger with the plans. So, there’s one thing to have a very well laid out plan and then when you get the funding and it’s time to start executing that plan, sometimes in the excitement there are some short-term or short-sighted decisions that are made outside of consultation with advisors that make it difficult for clients to manage cash flow,” she said.

“So cash flow management, especially in the first nine months or the first six months, is something that is extremely critical and something that we will probably focus a lot more on this coming year, because of what we’re seeing with clients who would have been funded and day one is about to start and they run out of money 30 or 60 days before, because of any number of different reasons. So, those are some of the cases off the top of my head where there are challenges specifically.”

Since it opened in September 2018, the SBDC has provided support to more than 1,500 companies throughout The Bahamas.

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