Government considers more support for Cayman’s small businesses

Visitors to the Small Business Expo at Hotel Indigo, Grand Cayman on 2 Oct. were greeted by a wide mix of firms exhibiting, from candlemakers to laser tag centres. Yet the successful firms at the bustling expo mask the serious challenges that small-to-medium enterprises (SMEs) face on the islands.

“Limited access to financing, particularly for start-ups or those without long credit histories, is a big challenge,” said Thais Ducent, director at the Cayman Islands Centre for Business Development.

The most affordable credit for small businesses on the islands comes from the Cayman Islands Development Bank. “We have a working capital loan up to $100,000 at a fixed rate of 6.25%,” says Tracy Ebanks, the institution’s CEO. “If you need it, we’ll do interest-only for the first year, and thereafter you get a three to seven-year repayment period.”

Because the development bank is government owned it can offer more support to SMEs than profit-driven commercial banks, says Ebanks. “Working capital loans sometimes tend not to have a lot of security behind them because of the purpose of these loans and that drives up interest rates. Most banks price to risk, but we took a stance that the people that really need lower rates are the ones that are going to be riskier.”

The development bank also has business loans for more established firms that go up to $500,000. “This is for buying an asset, such as a property to house a business,” said Ebanks. “The rates are between 5% and 8%, depending on what the money is going to be used for and the loan-to-value ratio.”

Again, Ebanks feels the development bank, which is the only local bank left in the Cayman Islands, fills a role that its private-sector peers can’t. “Most of the commercial banks won’t finance more than 65% commercially but we’ll go up to 80%,” said Ebanks. “We can finance [these loans] up to 20 years if needed but most commercial banks will max out at 15 years.”

Yet the development bank’s ability to offer businesses loans is dependent on the funding it receives from government. “We could issue bonds to raise more capital but that would mean we’d have to raise our business loan rates. So, for us to have a greater impact, say for example on the islands’ growing housing and infrastructure needs, we would require more funding from government.”

Cayman’s private banks also see an opportunity in small businesses. “SME banking is a growing area in the Cayman Islands and presents a significant opportunity for Cayman National,” said Catherine Bryan, Cayman National’s vice president of commercial banking. Bryan says the bank is also working on a range of new flexible loan products designed for small businesses.

More than just money

But while access to finance might be the biggest problem that Cayman’s small businesses face, it isn’t the only one. “High operating costs are another,” said Ducent. “With a small domestic market, they are vulnerable to external shocks such as downturns in tourism or global supply chain issues. Skills gaps, particularly in financial management, are also common.”

Ebanks also highlights other challenges for small businesses on the islands. “The cost of doing business here is not as low as people think,” says Ebanks. “Even though micro/small businesses only pay $75 a year to get a trade and business licence, there are all these other fees. When you’re importing everything, the cost is high, and so are your utility bills. Some businesses are cyclical and have low seasons that impact cash flows.”

That’s why the centre, which sits under the Ministry of Financial Services and Commerce, is working to develop the Cayman Islands’ first-ever small business policy. Ducent believes it is well overdue. “Most developed and developing countries have a formal small business policy. We want to create one that addresses the real needs of Cayman’s small business sector.”

“The policy will be evidence-based and aligned with government’s long-term vision for economic growth and diversification,” said Ducent. “Through research, business surveys, focus groups and data analysis, we will map out the small business landscape to better understand opportunities and challenges. This will guide actions on access to finance, innovation, digital transformation, and training.”

The new policy is already sparking some optimism in the private sector. “Cayman National views [the new policy] as a timely opportunity to expand its support for entrepreneurs through innovative financial solutions, tailored guidance and products that promote sustainable business growth and economic resilience,” said Bryan.

It won’t be quick, but Ducent is hopeful that the new policy should be ready towards the end of 2026.