BEDC: Business Assistance Program Details – Bermuda Covid-19 Coronavirus News
The BEDC has released details of its loan and grant relief programs to help small and medium-sized businesses, and said applications will be available from Wednesday, April 22.
A spokesperson said: “The Government of Bermuda, BEDC Board of Directors and BEDC recognize the economic impact that Covid-19 has had on local businesses and, in response, have developed Business Sustainability & Continuity Funding Program.
“The funding program includes a total of $ 24 million, including $ 12 million in assistance from the Government of Bermuda and $ 12 million under BEDC’s existing guarantee capacity.
Erica Smith, Executive Director of BEDC, said: The funding program is designed to help as many viable small and medium-sized businesses as possible to hover and stay afloat, as our island perseveres during the state of emergency. ; Shelter in place; and the social distancing requirements needed to contain the spread of Covid-19 across the island. “
A spokesperson said: “BEDC conducted a review of 17 jurisdictions around the world that were helping small and medium businesses affected by Covid-19. The review indicated that a combination of loans and small grants were provided to help businesses.
“This review, together with the results of the local survey BEDC received for the period March 20 to April 16, as well as an assessment of over 100 requests for financial support to BEDC to date, has helped the BEDC team in recommending how to divide up to $ 12 million in government financial assistance and the $ 12 million BEDC guarantee.
“The Emergency Financing Program consists of a portfolio of financing products that businesses can take advantage of, such as:
- 1. Direct loans and BEDC grants;
- 2. BEDC guarantees bank overdrafts; and
- 3. BEDC guarantees for loans from external entities [such as Banks; Credit Unions; Private Companies; Foundations, and Individuals].
“In order to get the most out of the total funding provided and help as many viable businesses as possible, the funding program is designed for businesses to use a combination of financial products, including BEDC financial products, financial products of the Bank and the financial products of other entities that meet the requirements of BEDC partners.
“This funding program will be in place for at least the next 9 months from April to December 2020 or until the support funds run out, whichever comes first.
“Funds have been allocated to provide support to business owners in general and existing customers who have BEDC products. Approved applications will be provided to businesses to help them cover necessary immediate business expenses such as payroll, rent and other mandatory costs associated with operations that have been impacted by Covid-19.
BEDC direct loan and grant relief program
“The total amount of funding any business can receive will be based on the company’s annual revenue or number of employees in order to segment requests between small and medium businesses.
“As such, the funding thresholds were divided into 5 funding tranches, the first 4 being allocated to small businesses as defined in BEDC legislation and the last tranche allocated to medium-sized businesses as defined in BEDC legislation.
“Funding would be distributed in installments based on an agreed schedule with a minimum disbursement period of 6 weeks and a maximum of 3 months. The disbursement of the last tranche is linked to the compliance by the company with its conditions for the retention and / or re-employment of a percentage of Bermudan staff. See the matrix below.
|Bands||size of the company||Annual revenue||number of employees||Maximum funding allocated||Maximum Grant Relief Portion of Funding Approved|
|1||Small||$ 1 to $ 100,000||1 – 3||$ 10,000||$ 5,000|
|2||Small||$ 100,001 – $ 250,000||1 – 5||$ 15,000||$ 7,500|
|3||Small||$ 250,001 – $ 500,000||1 – 7||$ 20,000||$ 10,000|
|4||Small||$ 500,000 – 1,000,000||1 – 10||$ 30,000||$ 15,000|
|5||Way||$ 1,000,000 – $ 5,000,000||11-50||$ 40,000||N / A|
“It was decided that mid-sized businesses would not be eligible for subsidy relief as they would be better placed to take advantage of BEDC’s other financial support Covid-19 with external entities such as banks by guaranteeing bank loans and overdrafts.
“The Business Sustainability and Continuity Funding Program is available to all existing small and medium-sized businesses across the island; including suppliers and companies located in a designated economic empowerment zone.
“Although available to all businesses that meet the criteria, BEDC is keen to support as many small and medium-sized businesses in Bermuda [SMEs] as possible. As such, BEDC reserves the right to prioritize applications based on our needs assessment.
“The details of the combined loan and relief grant funding program are as follows:
- The approved financial arrangements are 100% guaranteed by the BEDC.
- No credit check fee required.
- Repayment terms can be up to 42 months.
- The first loan repayment is 3 months after the month in which the funds were first withdrawn
- Interest-only repayment periods will automatically apply for the first 3 months after payment has started, followed by principal and interest [P&I] Payments.
- Interest only payments can be extended on a case-by-case basis for an additional 3 months.
- In addition to the combined loan and grant relief, small businesses may also be approved for a bank overdraft guaranteed by BEDC, subject to a maximum of $ 70,000 in combined financing of the loan, grant and overdraft.
- BEDC will only approve direct loan financing for midsize businesses up to a maximum of $ 40,000, but the first expectation is that midsize businesses will be assisted by the $ 12 million Guarantee Fund of BEDC to guarantee bank loans and overdrafts.
- Funding should be used for immediate operating debts / working capital.
- Processing and approval will take place within 10 business days of receiving a complete application.
- Disbursements will be made 1 business day after receipt of approval.
- BEDC will stagger the disbursements.
“Interest rates and application fees for the program have been significantly reduced to provide additional relief to businesses affected by Covid-19.
“BEDC recognizes the challenges businesses currently face and the stress that a business owner can experience. As such, our goal is to deliver a fundraising program that is as clear, simple, efficient and achievable as possible, ”said Ms. Smith.
BEDC Guaranteed Loan and Overdraft Program
The BEDC said, “This loan and overdraft guarantee program will complement BEDC’s direct grant and loan relief program described above to deploy a total of $ 24 million in financial assistance to small businesses. and local Bermuda businesses affected by Covid-19.
“Although not a bank, BEDC can act as a guarantor of a bank [or other approved lender] loan for small and medium-sized businesses that are viable and where the borrower’s creditworthiness is healthy. As guarantor of last resort, BEDC can guarantee up to 75% of the value of a bank loan and / or a bank overdraft up to a maximum amount in dollars.
- “BEDC can guarantee or provide a guarantee instrument to the bank to cover up to a maximum of 75% of the business loan up to a maximum guarantee of $ 300,000 with maximum repayment terms for loans up to 5 years.
- “BEDC’s guarantee on a bank overdraft can be up to 75% up to a maximum dollar guarantee value of $ 50,000. The maximum warranty periods for overdrafts are up to 18.
“While $ 300,000 is BEDC’s maximum guarantee for a business, BEDC will structure its guarantee flexibly in several ways. The processing and approval times for guarantees are 15 working days from receipt of a complete file. BEDC’s loan and overdraft guarantee currently works with HSBC, Butterfield and Clarien. Other lending entities will come on board once approved by BEDC.
Other financing options for businesses
“Following receipt of this $ 12 million government assistance program, BEDC now has the ability to reallocate the funds it has used up to now. [March 20th to April 16th 2020] for Covid-19 direct micro-loans to its portfolio of $ 1 million in direct loans for the [a] General Micro Loan, [b] Debt Consolidation Micro Loan, and [c] Micro-loan programs from sports clubs.
“These funding programs are accessible to new tangible startups that meet a need during and after Covid-19 [e.g. new delivery service] or for existing businesses that do not need funding for the immediate overhead / working capital needs identified above.
“BEDC also offers a full line of other products, from tax breaks to duty deferrals, that businesses can take advantage of if they are beneficial to the business and qualify. BEDC staff can advise you on these products when consulting your business needs.
“Applications will be available for this new funding from Wednesday, April 22, 2020. For more information on BEDC’s business funding support program for businesses affected by Covid-19, subscribe to our Webinar “Explaining BEDC’s Sustainability and Business Continuity Funding Program” which will take place today at 3 p.m.