Businesspeople in Tuvalu under pressure from banks
By Silafaga Lalua
Businesspeople under the Tuvalu National Chamber of Commerce (TNCC) are under a lot of pressure to meet criteria put forth by banks when they apply for loans.
In the TNCC’s Seminar held last week, capital was identified as a major problem to the sustaining of small businesses in the country.
Coordinator for TNCC Nakala Nia states that the 400 thousand dollar grant for small and medium enterprises SMEs from the Republic of China on Taiwan, has proved to be harder to get, since The Development Bank of Tuvalu (DBT) has its own criteria that businesspeople have to meet before loans can be considered.
Tuvalu news found that a businessperson needing a loan from DBT needs to pay 35% of the proposed amount, have to have security equivalent to the proposed amount and also to have guarantors who can secure the loan for the applicant.
In an interview with General Manager of DBT Taukave Poolo, he states that if the loan applicant contributes nothing to the loan, they don’t have any commitment towards it and hence do not strive to make prompt repayments to clear the loan.
He goes on to say that every investment needs to be fully secured so every loan made with DBT needs to have something that secures it so the bank do not loose out when the business collapses.
This security criterion mostly affects unemployed people who do not have any Provident Fund contributions and have no assets they can use as security.
He states that the flexibility of their regulations on criteria depends on what DBT Board decides on, but it tries to look at what is best for both the applicant and the Bank.
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