During last night’s government evening briefing, the Bermuda Economic Development Corporation [BEDC] provided information on what they are doing to “provide local business owners with support during these uncertain times in the wake of the Covid-19.”
“The Government has provided BEDC with an additional $12M in funding to support local small and medium-size businesses to supplement the current $1M in direct lending and $12M in guarantees we are currently able to provide,” the BEDC said.
“Further details on how the $12M will be allocated will be shared by BEDC to the public on Monday April 20th, 2020, including the new grant funds and new guaranteeing of overdrafts.”
BEDC Executive Director Erica Smith’s statement follows below:
I want to thank the Premier and the Minister for inviting me to be present at this press conference today.
On March 20th, 2020 BEDC announced that with the support of its Board of Directors it would reallocate funds from its existing budget and modify its existing products and services for the next 9 months, to be able to provide local business owners with support during these uncertain times in the wake of the Covid-19.
Since that announcement, funds have been allocated to provide support to general business owners, existing clients who have BEDC products, and new entrepreneurs seeking financial support. The funds have been allocated in accordance with the following:
General BEDC Support
1. BEDC has reallocated $350,000.00 from its existing 2019/20 operations/programmes to its capital budget to increase its capitalisation to $2 million. This has allowed:
- a. an increase to $1 million [50% of capitalisation] in direct lending [tied to point 7 below]
- b. an increase to $12 million [6 times capitalisation] for issuing loan guarantees for bank financing [tied to point 10 below]
2. BEDC has reallocated $100K from its existing 2019/20 budget to provide access to businesses to external expertise support in accounting, legal, and marketing services [supplementing BEDC’s support and expertise] to assist in right-sizing business once Covid-19 passes.
3. BEDC has facilitated the creation of an ideas pool where businesses can write in with recommendations and suggestions of how public authorities and departments can assist.
4. BEDC has amended its payment terms to pay all its vendors on a weekly basis to ensure they are not waiting for payments to facilitate better cash flow.
5. BEDC is acting as an intermediary connecting consumers/buyers with sellers as businesses will have underused inventory.
6. BEDC is facilitating businesses in forming partnerships, merging, sharing overhead, etc. with other businesses to reduce operating costs, both during and once Covid-19 passes.
Existing & New Financial Applications/Clients of BEDC
7. BEDC has increased its microloan offering from $20,000.00 [twenty-thousand dollars] up to a maximum of $30,000.00 [thirty-thousand dollars] per business with no security required.
- a. These are direct loans from BEDC without any bank involvement.
- b. New microloan clients have received a decrease in interest rates by 1.5% with current interest rates of 3% and 3.5% respectfully, for EEZ and non-EEZ Businesses.
- c. Microloans can be used for both working capital and limited capital purposes with a focus on immediate overhead needs such as payroll, rent, utilities, insurance, fees.
8. All new and existing microloan clients have the option to structure/restructure their loans for 3 to 6 months interest-only repayment periods based on need then followed by principal and interest [P&I] payments.
9. Existing microloan clients have the option to extend their loan repayment terms from currently 9 to 24 months to now up to 42 months if needed which will reduce their monthly payment amounts once they are in the P&I phase of their loans.
10. BEDC, acting as guarantor, is now providing collateral/security up to 75% of a bank loan amount up to a maximum guarantee of $300K at any of the 3 financial institutions. This is an increase from by 15% from the previous 65% guarantee and is directly attributed to increasing our capitalisation to $2M.
11. BEDC’s Guarantee will now be applied, for the first time, against lending from other entities. This can be such as individuals, private entities, credit unions, or companies, if BEDC’s KYC/AML requirements are met.
12. All BEDC application fees have been reduced by 50% for all products making the applications more affordable. The only exception has been for vending licenses due to the need for legislative amendments, but we have come up with a creative work around.
13. BEDC has also reduced its loan guarantee fees by 50% making the application more affordable.
14. BEDC has also absorbed the cost for credit checks for all applications thereby eliminating this fee to the client making the applications more affordable.
15. Entrepreneurs that operate seasonal businesses will have the option to have recurring interest-only periods for the life of their microloans [e.g. tourism – based businesses].
16. All new approved microloans will have the option to delay the first repayment date by 3 months to be on the last business day of the month 3 months after the month in which the drawdown occurs. This applies to the interest-only option also.
17. BEDC has now increased the maximum credit line it will guarantee for its Letter of Credit product for Retailers from $10K to $12.5K for 1 year. This will be a help for those retailers operating during Covid-19 and those who will restart once we are past Covid-19.
- a. It is a tool to assist with cashflow.
- b. This product allows approved retailers to import goods while being able to defer payment on the duty of those importations for up to 3 months from each importation date. This allows the retailer to sell the products before paying the duty.
- c. The retailer can draw down on the credit line for each import if they have available credit. It is also a renewable product.
- d. BEDC is currently working with the Customs Department on other amendments with the programme to assist retailers.
Entrepreneurship Education for Business Owners & Entrepreneurs
18. BEDC’s seminars, once reinstated, will be offered free of charge to all business owners and entrepreneurs who register.
19. Registration fees for all BEDC’s multi-week courses will be reduced by 50%.
Working with Government Partners
In addition to the above-mentioned areas of support to businesses, we also indicated back in March that BEDC would be working with the Ministry of Finance and various other Government Departments to determine what other reliefs can be provided to support business owners through this time.
As such, BEDC has completed the following actions to date:
- a. A jurisdictional review of other countries’ support to SME’s to help inform Bermuda’s support.
- b. A survey of local business needs to understand what local businesses need.
- c. Actively holding and participating in weekly webinars to assist local businesses and connect them with each other.
- d. Acting as an intermediary between business and government departments for assistance and clarification when needed.
- e. Continuing our Mind Your Business radio show on Ocean 89 every other Friday at 2 pm to engage and inform local businesses.
- f. Restructuring the current loan guarantees we are providing to 15 businesses on their bank financing as needed.
- g. Restructuring the current BEDC direct microloans we have with 51 businesses based on their needs.
- h. Over the last 3 weeks, over various mediums, such as social media, emails and phone calls, BEDC has easily answered hundreds of requests for advice and direction.
- i. Constant meetings with the 3 Banks to firm up the new guaranteeing of overdrafts and progressing our shared concept of providing “pre- approved” lump sums of guarantees to the Banks in order to cut processing times on business financing requests.
- j. Compiled a list of all the current Government Departments’ Covid-19 reliefs and assistance, which is available to businesses.
- k. Compiled a list of all the Banks’ Covid-19 reliefs and assistance, which is available to businesses.
- l. Working with private sector entities on developing additional financial products to support local small and medium-sized businesses to amplify what BEDC, the Government, and the Banks are currently providing.
- m. As of this afternoon, we are actively processing these close to 100 new applications have been received for financial help from local businesses.
Bermuda Government’s Additional Financial Support
I want to thank the Bermuda Government for the additional support offered to help to shore up local SME’s with this new funding. As an understanding and responsive Government, this support will go a long way to assist local businesses and is needed to help SME’s tread water through Covid-19 and come back post Covid-19.
The Government has provided BEDC with an additional $12M in funding to support local small and medium-size businesses to supplement the current $1M in direct lending and $12M in guarantees we are currently able to provide.
This allocation of the $12M will be made up of:
- i. Direct micro loans from BEDC to add to the loans we are already providing.
- ii. Direct grants from BEDC to supplement the loan financing in place.
- iii. Guaranteeing loans with the Banks – to add to the exiting guarantee provision with the thought that this will probably be focused more on the medium-size businesses.
- iv. Guaranteeing overdrafts with the Banks – for the first time BEDC will be guaranteeing overdrafts as a more efficient and quicker way to get much- needed funds to businesses.
The focus will be on immediate overhead and working capital needs that businesses are facing now and that they need to stay afloat such as payroll; rent; utilities; insurance; and fees. As stated previously, micro loans and guarantees for loans are already in progress and so business have been and can apply right now.
Further details on how the $12M will be allocated will be shared by BEDC to the public on Monday April 20th, 2020, including the new grant funds and new guaranteeing of overdrafts.
BEDC will also be holding a webinar on Monday April 20th from 3 to 4:30 pm to walk businesses through the process of applying for the products so they can understand what is needed, etc. Interested businesses should register here.
Please note that all BEDC staff, although working at home, are contactable through email, telephone, or web conferencing. All BEDC operations are functional with regards to receiving and processing applications and providing business advice.
Interested business owners should contact the BEDC directly by calling 292-5570 or by email at email@example.com. Additional information can also be found at www.bedc.bm where we have a Covid-19 page.
Please know that we understand the challenges faced by all businesses right now, and that BEDC and the Bermuda Government is committed to helping businesses through this unprecedented time. We are thankful to the Premier, the Minister of Finance, and the Cabinet for finding a way to provide this additional relief.