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Empty building on Frederick Street, Port-of-Spain, up for sale or rent.

Well over a year into the COVID-19 pandemic, thousands of businesses facing hardship have been forced to permanently close their doors. While some owners have had their commercial properties and private homes repossessed by banks, others are living in fear of suffering the same fate if they are unable to pay their monthly instalments.

Frustrated business owners from Trinidad to Tobago complained that some banks are not being flexible enough with them during this time of crisis and are pleading for help. Many others said they have been encountering problems accessing funding from the $300 million loan facility made available by the Government for struggling businesses during this pandemic. Business owners have been forced to look at alternatives to commercial banks like credit unions and the National Entrepreneurship Development Company Limited (NEDCO) as they make last-ditch attempts to save their livelihood.

According to a survey done by the Confederation of Regional Business Chambers–which includes 15 business groups among them the Supermarket Association, Petroleum Dealers, The Yachting Services Association and establishments from the East all the way to Siparia in the deep South–some 5,000 businesses have closed in T&T over the last 12 months since the pandemic hit in 2020. The coordinator of the confederation Jai Leladharsingh said the information came from a survey of their associations done in February. Leladharsingh said that many business owners are struggling and are in danger of having their properties repossessed.

“There are banking foreclosures taking place in the construction industry, companies in the services sector, companies involved in the restaurant sectors,” he added.

Leladharsingh said banks have not been helpful to the business community. He recommended that the banks give the businesses a loan moratorium for a year with no accrued interest.

“Banks make big profits while small businesses are suffering. They need to help businesses restructure their facilities.”

T&T Chamber and Tobago Division

CEO of the T&T Chamber of Commerce Gabriel Faria, meanwhile, said that a poll being done with non-essential businesses in the retail sector, bars and restaurants shows that so far ten per cent of businesses in that sector have closed their doors permanently.

He said the chamber was having discussions with the banking sector and the banks are making an attempt to work with customers to meet their needs.

In the sister isle, Chairman of the Tobago Division of the T&T Chamber Diane Hadad said 250 businesses have closed in Tobago since the pandemic hit. She said there has been an increase in banks repossessing business properties in Tobago.

She called on banks to give businesses a break and the opportunity to renegotiate what they owed banks before the pandemic.

“Bank foreclosures during this time should be a no-no. Let us say in March 2020 the business owner’s debt was a million dollars, let us stop there and let’s start a conversation about how we will begin to repay in 2022. So there should be a moratorium but not with accrued interest,” Hadad said.

Barkeepers and Operators Association

Public Relations Officer of the Barkeepers and Operators Association of T&T Anil Maraj said 50 bars have closed permanently in T&T over the last six months because of restrictions on their operations.

He said some bar owners are owing the bank for their properties and they are facing the likelihood of repossession because of their inability to pay their mortgages.

He urged bar owners to work with their banks for solutions to their problems.

San Fernando Area Chamber, Business Association

President of the Greater San Fernando Area Chamber of Commerce Kiran Singh estimated that over 100 businesses have closed in the area. He said there are reports that banks could be repossessing commercial properties soon as businesses cannot afford to pay their mortgages. Singh said banks need to work with smaller businesses just like they do with the larger conglomerates. He also suggested that they lower their interest rates.

President of the San Fernando Business Association Daphne Bartlett has estimated that 30 per cent of the smaller businesses, while almost 20 per cent of the medium-sized businesses in the San Fernando area and environs have closed permanently over the last 12 months.

Based on personal observation, Bartlett said she has seen “For Sale” signs increasingly being put up by business owners.

“Many small businesses have closed their doors because there are no income and expenses like rent, phone and electricity are accruing. These businesses would hardly be open in the future. Businesses are finding it difficult to finance their loans and credit facilities, the banks are hounding them down for even small amounts. These banks make huge profits annually.”

She recommended that banks offer a moratorium on small business loans until the economy improves.

Arima Business Association

The Arima Business Association has reported that almost 200 businesses have closed in that area over the last 12 months.

President of the association Reval Chatergoon, whose area covers from Arouca to Valencia, said there are some smaller businesses under threat of the banks repossessing their commercial properties.

He suggested that banks give businesses a six-month to a one-year moratorium and lower interest rates to assist them.

“There are a lot of businesses although closed still have to pay utilities, rents, mortgages, bank interests although we are not making any income.” He said they need “more time” to be able to pay their loans. This, he said, is in addition to the need for more vaccination. Downtown Owners and Merchants Association President Gregory Aboud, meanwhile, said that they do not have any statistics on business closures, and only when the economy is fully re-opened they will know.

Frustrated businesswoman pleads for help

One woman who is on the verge of losing her home and business to the bank is appealing to financial institutions to try and understand the hopeless situation that they have found themselves in due to the pandemic.

The frustrated and depressed businesswoman, who asked that her name not be used, is the owner of three businesses in the East which includes a restaurant and bar. She said they can barely pay their mortgage and although they have a good record with the financial institution, the bank has not been flexible.

“My bank knows the kind of business I do with them. The banks need to defer loan payments to give us a helping hand. I’m not seeing any way out of this. This is very hurtful and frustrating.”

The woman said, “The landlords gave us some time under the first lockdown. They expect things to open back next month. But if I can’t reopen as I don’t have the money, what will they do? The landlords need their money too.”

Giving details on how much they pay in rent for the month, she said, “One place I’m paying $25,000 rent, the next place I pay $15,000 and the third place I pay 10,000 monthly.”

Even though she applied for a Government-backed loan for small businesses in 2020, they never got a reply.

She said her family business was hard hit when the Government suddenly announced the lockdown in April.

“When they implemented the lockdown at the end of April, we had just spent $25,000 for goods, none of which we used as restaurants were closed. We had it in the store and we said we could not let it go to waste so we gave employees rice, chicken and flour out of that stock. I try to help my workers.”

The owner said they may not be able to open their three businesses when the lockdown is lifted due to the heavy financial strain that they face. They might have to settle for reopening only one of the businesses. Although they employ almost 30 employees now, she said they may have to lay off workers if the situation deteriorates.

She said if the Government can offer a loan facility where they get a two-year deferral before they start back to pay, that would help small business operators like herself.

More business owners approaching credit unions for loans

Leladharsingh, who spoke at a two-part webinar series hosted by the T&T Coalition of Services Industries and the Co-operative Credit union League last week said that credit unions must be seen as an important alternative to banks and they should be used to leverage savings and used as a tool to make investments.

He recommended Angel Investors step in to help businesses survive. He praised NEDCO since they have more experience in developing SMEs.

The Central Finance Facility (CFF)–established to serve the credit union industry by providing opportunities for investments through pooling of resources to enable higher rates of return–explained to the Sunday Guardian that traditional businesses have not sought credit unions for credit facilities as credit unions are not allowed by the Cooperative Societies Act to lend to businesses as legal entities.

However, credit unions have granted millions of dollars to members to establish and expand their businesses.

“There has been an increase in business people approaching credit unions for loans since COVID-19. This has certainly been the case for the CFF. While the Government has agreed to a proposal spearheaded by the Central Finance Facility for credit unions to provide loans to members for business expansion and continuity, through a one hundred million dollar COVID-19 Business Support Facility, implementation has not been finalised as the credit unions are waiting for the agreements to sign.”

In the interim, the CFF said 14 of its member credit unions have established an initiative called “Project 2020” where credit unions will invest both debt and equity into non-financial cooperatives with growth potential.

“Special considerations will be given to cooperatives with capacities to enhance food security, reduce the import bill and increase foreign exchange earnings. The CFF is currently engaged in negotiating memoranda of agreements with five such cooperatives and is being assisted by the Business Development arm of the Commissioner for Cooperative Development.”

The CFF said it awaits the finalisation of the necessary documents and agreements to enable the Credit Union COVID-19 Business Support Facility to be implemented as it has already put all its mechanisms in place.

Manning:

Govt will look at relaxing requirements to access loan

Minister in the Ministry of Finance Brian Manning in an email statement said that Minister of Finance Colm Imbert announced that with respect to the SME loan facility, the banks have informed that a significant number of applicants could not qualify for the loan because they did not have audited financials, management accounts, they were not up to date with VAT, NIS and income tax payments.

He said the Finance Minister has already consulted with the Central Bank to develop an outreach programme targeted for SMEs to get them to understand basic requirements such as proper accounting for loan applications. Additionally, they will look at relaxing the requirements to assist businesses to qualify and access the loan facility.

Manning also spoke about other options that small business owner have who are facing hard times.

On June 18, 2020, the Government of T&T approved a Small-Business Grant Facility for businesses with less than $1 million in annual revenues. NEDCO has been given the mandate to manage this grant facility which will be resourced with an allocation of $30 million. Applicants will be eligible for a maximum grant of $20,000.

The $30 million Grant Facility administered by NEDCO will be available to small and micro business operators with annual revenues of less than one million ($1,000,000.00) throughout T&T.

Manning added that NEDCO offers loans of up to $250,000 (TT) to qualifying Small and Medium-Sized firms. NEDCO has designed specific entrepreneurship training programmes for companies like yours. The objective of this training is to develop the core competencies of not only the business but also the individuals behind the business.

No response from Bankers Association

The Guardian sent the Bankers Association of T&T (BATT) an email raising concerns about the banking sector and what they have been doing to assist the business community during this difficult time, but there was no response up to late yesterday.

‘Commercial property market on life support’

Meanwhile, President of the T&T Real Estate Association Kerron Brown who is also a real estate broker at GenX Realty Ltd said there was “little activity” in the commercial property market.

“The commercial market is on life support. I have seen a lot of places come on the market for rent and while there are some brave entrepreneurs looking to open businesses at the time they are in the minority.

“You are seeing some commercial landlords putting their properties up for rent or sale, but neither has much activity in San Fernando at least. In my opinion, COVID-19 has pushed us into the online meeting environment and we will never reverse this trend. The need for the commercial space will not go away but the substantially reduced demand will send rental prices down and maybe send some landlords into foreclosure.”

Brown said he has not seen a great increase in commercial properties being put up for sale, however.

“I just reached out to two of my colleagues and their feedback is that they are not seeing a great increase in commercial properties being put up for sale but just an increase in commercial vacancies. I would also agree with this sentiment, but I think smaller commercial property owners who have mortgages and are losing tenants may have to sell if this vacancy trend continues, but time will tell.

“If the lockdown is extended past July 4 or if we have another wave of COVID-19 cases that causes further economic trauma, things will get worse.

“If you have savings to ride the wave then you sit it out. If you don’t then you try to sell.”

Brown believes that banks are being lenient by giving time to those they know can get back on track when things get better.

“The banks are conservative and have taken a more conservative position since COVID-19 where perceived job stability is concerned. This means that some buyers who may have been qualified last year may not qualify this year. The impact of this on the market is simple. Fewer buyers in a marketplace with more properties available for sale push real estate prices down.”