By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Growing “desperation” among his small business clients has prompted many of them into a rethink when it comes to applying for government assistance, a consultant has revealed.

Mark A Turnquest, of Mark A Turnquest Consulting, told Tribune Business that zero income as a result of the COVID-19 lockdown had prompted several of his clients to overcome their initial reluctance and apply to the $20m Business Continuity Loan initiative.

“I’ve found a lot of my clients who were initially reluctant are getting desperate and applying for the loan,” he revealed. “It’s desperation. The lack of money and the lack of sales. They’re trying to recover some of their expenses, and they’ve realised the benefits outweigh the costs of the five percent interest rate.

“What the government’s giving on the loan, they realised they should take it and pay some fixed costs, because 90 percent of our clients’ rental payments are between $2,500 to $3,500 a month due to their size and location. A lot of them are in prime areas, and a lot of them are big stores with a great deal of inventory.

“You’ll find a disproportionate number of people applying for the loan because businesses can’t create sales to they’re trying to cover their costs. They’ve realised they don’t have to start paying off the loan until after four months. If they receive the money in May they don’t have to repay until September, and hopefully they will be back in the game by then.”

Mr Turnquest said his initial estimate that the Business Continuity Loan initiative would require at least $50m in funding looked to be coming true after Davinia Blair, the Small Business Development Centre’s (SBDC) principal, yesterday said total applications worth some $34m had been submitted.

“The apex is going to be $50m,” he added. “The surge will be going on. They need more money. They need to get an additional $30m to cover this because that’s a need for small businesses right now.”

Figures supplied by the SBDC exactly one week ago showed that micro and small business (MSME) applications to the Business Continuity Loan programme were collectively seeking more than $32m in financial support to ride out the fall-out from the COVID-19 pandemic.

Some $1.2m had already been disbursed to these companies at that date, with $5.5m worth of applications approved by the SBDC and the initiative’s lenders. The data showed 63 MSME applications had been approved, with 563 completed submissions received and another 1,120 in a state of partial completion. The applications covered companies that collectively employ 2,656 full-time, and 664 part-time, workers.

“It has surpassed the $20m expected,” an SBDC spokesperson said of the demand for the Business Continuity Loan initiative. “The Government will make announcements regarding an increase once a decision has been taken.

“We believe the impact will be significant, as it will allow businesses to maintain a favourable position with obligations during the economic shutdown and to brace themselves for economic recovery. Economic recovery recommendations will soon be finalised in consultation with the government and MSME stakeholders.”

A breakdown of applicants by industry revealed that around one-quarter, or $8m, of the total financial assistance being sought relates to applications from MSMEs in the services sector. A further $6.334m, or 20 percent, had been requested by those in the retail sector, and $6.881m by firms classified as “other” industries.

Manufacturing applicants had sought a combined $3.23m, amounting to ten percent of the total, with those in finance, insurance and real estate and construction requesting a total $1.657m and $2.146m respectively. MSMEs in the wholesale industry, and transportation, communications, gas and sanitary services, had requested $1.68m and $1.282m, respectively.