Do not be afraid to take loans – experts urge small businesses

Recognising that access to capital is a major challenge in the start-up and early operations of small businesses, experts have advised these categories of entrepreneurs not to be afraid to take loans, noting that there are several options available locally.
However, before a small business decides to apply for a loan, its operation is critically assessed to determine the exact uses of the finances, and whether those would impact the success of the venture.
These points were highlighted by Felecia Boyle-Bazard, a representative of Executive Business Solutions Guyana Inc, who was participating in a panel discussion organised as part of the Georgetown Chamber of Commerce & Industry’s (GCCI’s) National Small Business Week.
During the discussion, it was pointed out that in order for small businesses to even be considered for a loan at a commercial bank, a number of documents and paperwork are needed to be submitted – a tedious and bureaucratic process.
“Yes, I feel you, and I hear that it takes a lot to get all this paperwork…But even before…you figure that you want a loan, figure out where you stand as a company, what you are going to do with this loan, and how it’s going to increase revenues for you… So, I really encourage you to think about the bigger picture and where your business stands,” she advised.
Eusi Evelyn, who represented Green State Oil and Gas Services, recognised that many small enterprises are afraid to take loans – an attitude which he insists they must rid themselves of.
“Don’t be afraid of loans… with good financial management, you are more likely to tap into bank loans that you can use to buy equipment to support your business in the future,” he reasoned.
It was emphasised that outside of commercial banks, there are, through the Small Business Bureau (SBB), many financing options available to small businesses.
SBB’s Shamane Headley said these include investors, grants, loans and bootstrapping. “…the small business development grants. We also have the small business development loans and the sponsorship,” she said.
“Generally, the sponsorship is available for persons who are interested in marketing or promoting their businesses and cannot access the grants or the loan at the time,” she explained.
“But in addition to that, the loans are always available through the SBB. Currently, the grants available are within Gy$200,000, and all these are available for all business sectors locally; but we should let persons know that it is not accessible by Public Servants,” she added.
“However small business loans are available at the maximum of Gy$30M…it’s available to all business sectors, and the benefits include 6% interest rate and a collateral guarantee between 40% to 70% from the Small Business Bureau. So, once you’re a registered client of the SBB, you can choose either of these financial options through the SBB,” Headley emphasised.
A 2018 Inter-American Development Bank (IDB) Report had documented that most businesses in Guyana are small- and medium-sized (SME), they operate in a less-than-auspicious business climate, and their failure rate is high.
The IDB Report noted that two of the reasons that financial intermediaries are reluctant to grant credit to SMEs are the perceived higher risk of failure, and the lack of adequate collateral.

Tips for financial management
Meanwhile, in sharing tips for financial management, Evelyn explained that small businesses should acquaint themselves with the concept of bookkeeping, making accurate projections, creating financial statements, and accessing business financing. He stated that poor financial management can lead to challenges in staying on top of bills, securing financing, managing a budget, and controlling debt.
“Creating a budget is the first place to start with your financial management practice. A budget is a list of all your monthly/yearly expenses organised by categories…a cash flow projection is used to see if projected cash receipts will be sufficient to cover projected cash disbursement,” Evelyn advised.
He also explained that book-keeping leads to better business decisions regarding financing, taxes, owners’ withdrawal, and retirement.
“It also helps you to make decisions on planning, inventory, and setting prices…also, determining whether you have sufficient cash flow to sustain operations… It will also help to provide to banks and investors the financial reporting they need to loan money or invest in the business,” he added.

Financial software
In order to stay in the game, small businesses were also encouraged to see the benefits of investing in financial software.
This point was explained by Marlon George from Guyana Payroll Solutions Inc, who was another panellist.
George noted that utilising financial software is important because it enhances a business’s professional image, brings awareness of business performance, is efficient and responsive, and gives the ability to organise and plan.
“The developers continuously update these applications, and so you benefit from enhanced security. They think about all the accounting in the backend, and how these things should work,” George explained.
He advised that when selecting financial software, businesses should research the reviews, sign up for demos, ask questions, and make sure the interface is easy to navigate.

Change with the times
In December 2021, President Dr Irfaan Ali had challenged small and family-owned businesses to change their approach, so that they can get a larger chunk of benefits during this transformational period.
“Yes, the family businesses are good, but times are changing, circumstances are changing, and if ten small businesses can come together and take away 35% or 30% share in that market, aren’t they better off? There is a better competitive advantage… Sometimes individually we are satisfied with a small share… but it’s not about being satisfied with a small share, it is missing out on opportunities,” he had said.