The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

Small business owners yesterday voiced scepticism over the Central Bank’s plans to transform secured lending in The Bahamas by creating a movable collateral registry, arguing that efforts to aid the sector should be focused elsewhere.

Krishan Bowe, owner/operator of Barn None Bey, told Tribune Business she is not interested in becoming more indebted as a small business owner through borrowing, adding that this is “not the climate for new loans and more debt”.

She was responding to the Central Bank’s plans to implement an “Internet-based collateral registry” that will overhaul secured lending from both the micro, small and medium-sized (MSME) business perspective and that of the lender. The proposed registry would enable MSMEs to pledge mobile assets, such as vehicles and equipment, to lenders as security for credit advances, while the latter’s interests would be protected at all times.

Ms Bowe said: “Personally, I am not looking to incur debt at this time. So I wouldn’t say that it would be an incentive to take out a loan. I don’t think that we’re in a good time to do that. I think we’re in a mini-recession, so taking on additional debt does not look promising in my perspective right now.

“This doesn’t help the market. I think a lot of what we need is concessions on purchasing goods like food, even if it was only some ease on being able to import ourselves. Finding things in this market is a major problem. Wholesalers and retailers are unable to keep product in consistently, which makes our product inconsistent.”

Philip Darville, SolveIT Bahamas’ managing director, said “anything” that would help the MSME sector is a bonus. But he added that the challenge with the proposed movable collateral registry is that the “value is all interpretation” when it comes to intangible assets such as accounts receivables and intellectual property rights, as well as vehicles.

Mr Darville explained: “You can’t put a concrete value on a lot of the items, especially talking about a vehicle that depreciates daily.” Most banks, he said, try to limit their exposure and minimise lending risk. As a result, they will not “over-extend” themselves on risky assets.

“So this may just be for bridge gaps or bridge points, but I don’t see it as a substantial facility,” Mr Darville said. “The loans come in handy, especially for companies that require access to cash or companies that need credit facilities in place to complete transactions, and are waiting on payouts from the bank. It’s just that this level of asset class is subject to arbitration. This may be a good public relations move, but logistics wise, I would take this with a grain of salt.”