Stakeholders in the tourism sector will be receiving much needed financial assistance. This sector has been hit the hardest by covid-19, since all points of entry were immediately closed, which in turn had detrimental effects for stakeholders. The Government has committed to helping these persons affected by partnering with Development Finance Corporation (DFC). Loans, both big and small, will be available for the stakeholders to use as working capital – which means that the money can be spent on salaries, maintenance, and any other reoccurring expense such as health and safety measures. The Prime Minister, Dean Barrow, held a press conference this morning to discuss the matter. He stated there were some hurdles to overcome before this program could have been finalized.
Rt.Hon Dean Barrow, Prime Minister of Belize: “The consolidated line of credit that the DFC has from CDB is the source or was to have been the source of the financing that DFC wished to provide to tourism stakeholders. However the conditionalities that governed that CDB line included a restriction on DFC using any of the money to lend for working capital purposes and so we needed to find a work around where that was concerned. Far more importantly the lending rate to DFC meant that after DFC tacked on it’s administration fee which of course would have been extremely modest as modest as the DFC could have made it but still it would have had to naturally be an ingredient on lending to the tourism sector, we were looking at a possible interest rate to the stakeholders of 8% or more. I had promised at that time that I would try personally to intervene with the president of the CDB to see if we could get a lower interest rate. Well I did speak to the president the upshot of that conversation is that certainly the restrictions on lending for working capital purposes those restrictions have been lifted so that the DFC is now able to use a portion of that CDB consolidated line to lend to tourism stakeholders and for purposes of working capital loans. In order then to be able to assist the DFC lend this money to the tourism stakeholders at 6% government will subsidize 1% of the loans. The DFC in consequence of their resourcefulness and ingenuity of the general manager and the entire staff the whole institution was able to get it down to 7% that’s one percent above what I had committed to and so government will take up the subsidy of that 1% difference.”
Natalie Ewing-Goff, the General Manager of DFC was present at the press conference to bring some clarity to the program. She stated that they have identified ten million dollars to use for the program. She also spoke more about the eligibility guidelines.
Natalie Ewing- Goff, General Manager, DFC: “Belizean nationals, residents or non nationals or any locally registered entity with no less than 51% Belizean ownership however considering that in the tourism sector we do have non nationals who are employing Belizeans and generating foreign exchange for the country those will also be considered on a case by case basis. The credit will be made directly to the tourism sector and all businesses not only hoteliers but they must have been operational prior to COVID and must have been in a relatively good standing with their financial institution. The business must have demonstrated sound financial performance and have some sort of in house statements, it doesn’t have to be audited as required, and tax statements for periods prior to COVID. This one we can’t avoid, all clients will be subject to the approved anti money laundering and counter financing of tourism on boarding requirements. What does the loan criteria look like? The business, because the whole purpose of the program is to maintain economic activity and aid in recovery the business will be required to retain a minimum of 30% of their work force. We would prefer a higher amount but at least 30% depending on the scale of the business and the type of operations. The funds, the maximum loans size at this time that we’re looking is $1 million. Now if we have too many of those the money will go so those will be minimal but that would be the absolute maximum loan size and again that amount will only be afforded if absolutely necessary to maintain the operations. Loan amounts up to $20,000 -so it’s tell you that we will be considering small loans- can be secured by a third party and a promissory note. Loan amounts above $20,000 up to $100,000 can be secured by a combination of bill of sale, chattels, insurance assignment, rehypothecation of deposits and third party guarantees and of course promissory notes. However loans above a hundred dollars will require real estate collateral.”
The repayment method will be based on cash flow of the stakeholder, but in the initial phase they will be granted a repayment period of 5 years, with 1 year grace period. The loan will be review annually as well. The concern of whether the stakeholders will be able to repay, and in a timely manner, arose as with covid-19, there is no guarantee. Goff explained that they will be working with the various businesses.
Natalie Ewing- Goff, General Manager, DFC: “We are doing our due diligence as I mentioned. Those who will benefit will be those who were in good financial standing prior to COVID. So you would have to shown us that you were able to manage a business and that what have you in the position is COVID. So we will be doing that analysis. While we are not doing a whole long drawn out process as if we would be investing in a new venture because these are existing ventures the due diligence and those who have records even in house records will be able to use that, things like tax statements. So you would have to display some sort of ability to manage a business for you to be able to access the funding.”
The loans will not be distributed prior to the reopening of the airport, so many business may have to wait to reopen if they are in a financial strain. PM Barrow stated that this is not a major cause for concern.
Rt.Hon Dean Barrow, Prime Minister of Belize: “What is expected on August 15th and for some while thereafter is a trickle rather than a flow of returning tourists, of returning visitors so I don’t think that a great deal is lost by the fact that the disbursements can’t take place perhaps until let’s say September. It is around September that we expect to begin to see more robust return of the tourists to Belize and in a sense then the confluence will be ideal. So I hear you but I don’t think practically speaking it is too much of a concern, it is too much a deterrent, too much of a drawback.”
Goff has stated that the DFC is working on other programs to assist more Belizeans.