COVID-19 Crisis Puts Businesses in Dire Straits
After initially assisting taxi drivers and tour operators directly affected by the Cayman Islands Government’s 60 day cruise ship ban with a small stipend, Cabinet is now throwing out a much needed life-line to micro and small businesses during the larger scale Coronavirus lockdown, which has caused grave uncertainty for companies in the British Territory over the past weeks.
Business owners have battened down the hatches to weather the financial fallout caused by the strict measures the country has put in place to ‘flatten the curve’ of new infections in the wake of the worldwide pandemic of Corona Virus/COVID-19.
As part of the Government’s plan for small businesses, help is now coming in the form of low-interest loans; technical assistance; training and a minor and small grant programme.
With regard to low interest loans, organizations will be provided with support to help meet their operational cashflow requirements. This part of the programme is being administered through the Cayman Islands Development Bank and will benefit businesses that are 100 percent Caymanian owned.
Each borrower will be provided with a Government guarantee, with micro businesses being eligible for $20,000 and small businesses being offered CI$50,000.
There will also be a six month moratorium during which time the bank will not collect principal or interest payment on the loan, which will be given for a period of five years at 1 percent interest in the first year and subject to increase thereafter.
Applications are being fielded by the Cayman Islands Center for Business Development.
Criteria for assistance is still to be announced and persons interested are being urged to send an email to email@example.com.
Businesses owners such as Cindy Oostvogels of Polished Nail Salon in the Galleria Plaza, which has been in business for over 10 year spoke exclusively to the Caymanian Times and outlined what the loan would mean to them being able to continue.
“The small business loan would be a life saver for us because after the first week back, the staff will need to be paid and the revenue will take time to build. There is also permits, medical insurance, rent, utilities and trade and business licensing fees that need to be paid.”
She added that general living expenses while the business has not been operational has meant that many business owners have had to go into savings while there has been no revenue.
“Many small business owners will have to seek employment to get through until they are able to open again to make up the immediate shortfall and try to service some personal expenses as well as those business expenses that cannot be deferred, though at Galleria we have had a decrease in rent during this time,” she explained.
The Government is also offering a Technical Assistance Programme, which will use qualified accountants and other professionals to provide technical guidance and coaching to micro and small businesses in order to keep their financial obligations to financial institutions.
Technical Assistance will initially be provided for one year and will include areas such as document preparation to access financing, grants and other stimulus products, preparation of business plans and strategic plans, business forecasting and business impact analysis.
Additional aid to businesses will include a training and Handholding Programme, which seeks to help organizations prepare for a post COVID-19 world.
Modules in the Handholding Program range from managing cash flow in a crisis to managing change and business model innovation. Training will be provided at no cost to participating businesses.
Businesses must complete at least one of the sessions of the Handholding Programme as a prerequisite for accessing low-interest loans being offered.
The Micro and Small Business Grant Programme targets three thousand vulnerable micro and small businesses and is intended to provide initial assistance of CI$1000, monthly to selected businesses for three months.
Objectives of this program are to provide working capital assistance to micro and small businesses affected by COVID-19, which have enough domestic market to render the business recoverable, as well as to aid in the re-purposing and transition of business that had a large tourist marked and have demonstrated the ability to transition to a larger domestic market.
In order to be eligible for the grant programme, a business must have been operational for at least twelve months prior to March, 2020. It must also meet the definition of micro and small business as set out in the Trade and Business Licensing Law and must evidence an increase in receivables and/or a decrease in sales related to COVID-19.
Ms. Oostvogels noted that though the CI$3000 is generous, her business is counting on the small business loan.
“We will have to secure one of the low-interest loans to make it.
“After the first week back, the staff will have to be paid and all the deferred bills will have to be paid, meaning general revenue may not be able to make up the shortfall, despite the assistance of CI$3000.”
There is also the matter of possible layoffs for small businesses to consider, as those who have been in business for some time will have to pay long-term employees severance; a reality many are unable to face in these difficult times.
This has meant that small businesses have been reluctant to let staff go in order to save for other bills; a situation that is all the more precarious given that the government is recommending that some of these workers consider going home.
In many instances home countries of some staff have travel restrictions in place adding to a logistical nightmare for the Cayman Islands Government, who may have to take care of these workers. The situation is also a major concern for landlords.
Workers themselves say they are concerned about general living expenses and with no access to money remittance services, the prognosis seems stark from all vantage points.