In a bid to help small and medium sized businesses, debt consolidation micro loans of up to $20,000 are being offered by the Bermuda Economic Development Corporation.

In addition, the BEDC has increased its ability to act as a guarantor for bank loans taken out by a small and medium sized businesses on the island. It had previously been able guarantee 50 per cent of a loan, but can now do so for 65 per cent, up to a maximum guarantee amount of $200,000.

The ability to do this is thanks to an increased funding commitment from the Bermuda Government that has lifted the agency’s capitalisation from $1 million to $1.65 million. That allows the BEDC to leverage its capitalisation six times to write $9.9 million in loan guarantees — up from $6 million — and increase total direct lending from $500,000 to $625,000.

Jamahl Simmons, Minister of Economic Development and Tourism, said increasing the loan guarantee percentage “addresses a long standing barrier for many entrepreneurs to access bank loans, thus closing the gap created by a lack of collateral to secure bank financing”.

Regarding the debt consolidation micro loan programme, Mr Simmons said: “For years, local entrepreneurs have spoken of the challenges they have experienced in getting the capital needed to start-up, sustain, or grow their local business.”

He said that due to Bermuda being a costly place to live and do business, some entrepreneurs without “the proper channels of support” had been forced to close down or operate below their potential.

“Entrepreneurs told us that a debt consolidation micro loan programme would be a tremendous help, allowing them to consolidate small debts, reduce their carrying costs, and thereby increasing business cash flows. The BEDC and the Government have listened and taken action,” he said.

The micro loan programme will help businesses consolidate back debts between $5,000 and $20,000 that have accumulated during the past three years. The BEDC has $200,000 allocated for this programme.

• An expanded version of this story will be published by The Royal Gazette tomorrow.

• Information about the programmes can be obtained from the BEDC by calling 292-5570, e-mailing to info@bedc.bm, and visiting the website www.bedc.bm