Saturday, February 13, 2010
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Small business BISX listing call By Inderia Saunders ~ Guardian Business Reporter ~ inderia@nasguard.com: The former state minister for finance is suggesting a small business BISX listing is even more important now, as banks move to slash overdrafts to that already-struggling group. James Smith said the small to medium-sized enterprises have seen their traditional means of funding dwindle in the recession and that new businesses in particular without a track record were especially vulnerable. "The bank's are cutting back for obvious reasons. . . they have had increases in bad loans and they've provisioned for it and that adversely affected their bottom line and they've been more cautious in extending credit," he told Guardian Business. "Unfortunately the startup businesses would get caught in this, so even if they got good ideas or their business needs to expand because of a demand for their products or services it's still difficult for them to access funding at a reasonable rate. "So if you cannot raise funds by way of debt, meaning a loan, the alternative way would be by equity, which would be issuing either an over the counter." A listing on BISX would provide a window for startup businesses to ensure capital and would be much less restricted than normal listings of public companies. It's a restriction that has everything to do with the price to play, with costs ranging around $20,000 to register a prospectus, Guardian Business understands. Under a junior BISX listing, which would seek small- to medium-sized business listings for a secondary index, that fee would be substantially reduced to accommodate the smaller businesses unable to afford such a high sum upfront. "Not to have to go through the stringent requirements of a fully listed stock exchange would help many small businesses," he said. "Whereby there is an over the counter market where you have someone who is willing to take a chance and may purchase shares in your small business and allows you to go on." His comments follow statements by chairman of the Bahamas Business Association (BBA) Marvin Smith that mass cancellations of overdrafts by commercial banks has forced nearly 60 percent of small businesses to tread already choppy financial waters. "It's getting progressively worse for small businesses," he said earlier. "Banks are canceling overdrafts or not renewing them, or they are being very stringent with abiding within limits [and] that's a dead blow to businesses because that's the cash flow... you can't operate without it. "And about 60 percent of [small to medium sized enterprises] are having challenges with this now."
Monday February 1, 2010 |
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