Trinidad businesses bawling over banks’ foreclosures on defaulters
The Trinidad Guardian reported on Monday this week that “thousands of businesses facing hardship” have had no option but to “permanently close their doors” on account of decisions by commercial banks not to provide them with extensions of loans.
The newspaper says that “while some owners have had their commercial properties and private homes re-possessed by Banks others are living in fear of suffering the same fate if they are unable to pay their monthly instalments.”
The issue of the likely posture of banks towards borrowers, particularly in the business sector, once the pandemic extended itself over a protracted period, has been a Caribbean-wide topic for discourse. With more than a year having gone by since the Covid-19-driven decline in the performance of the business sector, it seems that commercial banks operating in the Caribbean Community member country have now decided to move against their borrowing defaulters.
The Guardian says that the action by the banks in Trinidad and Tobago, none of which are named, have triggered complaints from some ‘frustrated business owners” that some banks are exercising insufficient flexibility in what the newspaper describes as “this time of crisis.”
Simultaneously, according to the Trinidad Guardian, small-business owners are encountering problems accessing funds from a TT$33 million loan facility that has been made available by the Trinidad and Tobago government to cushion the challenges being faced by “struggling businesses” during the period of the pandemic. Consequently, it would appear that out of a sense of frustration with the posture of the commercial banks, small businesses have begun to turn to alternative borrowing sources including Credit Unions and the country’s National Entrepreneurship Development Company Limited (NEDCO) in what the newspaper says are “last-ditch attempts to save their livelihoods.”
The Guardian story refers to a survey done by the country’s Confederation of Regional Business Chambers – which includes the Supermarket Association, Petroleum Dealers, The Yachting Services Association, and other establishments – alluding to the closure of 5,000 businesses in T&T over the last 12 months, since the pandemic hit in 2020. The information reported came from a survey of the various business associations done in February.
The Guardian article quotes prominent business sources in T&T as saying that banks have not been helpful to the business community. And one businessman is reportedly advocating that banks afford businesses a moratorium for a year with
no accrued interest.
Guyanese business owners with whom the Stabroek Business has spoken, have said that the posture of the local banking sector here appears to be a driven by a case-by-case judgement based on the banks’ assessments of the sturdiness of the businesses and whether or not it has anything to do with issues of size and turnover. When the issue was put to a downtown hardware store dealer he said that big businesses had just as great a
chance of being affected by a borrowing cutoff as do small ones. “It depends on the banks’ assessments of the recovery capabilities of businesses which do not, in many instances, have anything to do with the size of the business,” he said. When asked to comment on the Trinidad and Tobago situation the Guyanese businessman would only say that it seemed as though the Trinidadian businesses are facing a different situation to ours.