Government lending and business-support institutions say they are doing “cartwheels” over the credit bureau’s imminent arrival as this will enable them to better assess each borrower’s risk.

Dave Smith, the Bahamas Development Bank’s (BDB) managing director, speaking on a Bahamas Business Outlook panel discussion, said 76 percent of the institution’s existing loan book was non-performing when he joined. With loans not being serviced, the BDB had insufficient capital resources to lend money to qualifying new clients.

He added that the arrival of The Bahamas’ first credit bureau “might be an inducement for persons to meet the obligation, or to be a bit more forthright and communicate with their financing institutions when they having issues and problems. So I think that’s a plus. The other thing I think the credit bureau, in particular, would do would facilitate faster adjudication of an application.”

John Rolle, the Central Bank’s governor, told the same Bahamas Business Outlook conference a day earlier that the credit bureau will start to produce “live credit reports” on personal borrowers by the start of the 2021 second quarter.

The creation of a Bahamian credit bureau has been a decade in the making, with the initiative first unveiled by the Central Bank in 2010. It has long been viewed as a vital ‘missing link’ in The Bahamas’ credit architecture, with its absence depriving lenders of a centralised information repository they can draw on to better understand a borrower’s credit profile and risk of non-repayment.

It is now in the process of gathering information from lending institutions mandated to supply it with all details on existing borrowers, particularly their credit profiles and histories, by the Credit Reporting Act.

Among those required to supply information to the credit bureau will be the commercial banks, insurance companies, credit unions, financial and corporate services providers, Bahamas Mortgage Corporation and Bahamas Development Bank. Others likely to be added in the future are the utilities, auto dealers and furniture stores that extend credit to customers, and even the government’s revenue agencies.

The credit bureau will then compile and organise this information in a credit report provided to lenders, which will help them assess the risk provided by each loan applicant and reject those with poor histories.

Its launch means that delinquent Bahamian borrowers are rapidly running out of time to get their affairs in order, and will no longer be able to bounce from bank to bank and obtain multiple loans through not disclosing their past.

Meanwhile Michael Cunningham, the Bahamas Entrepreneurial Venture Fund’s chairman, said: “When we look at high risk ventures, persons come in and they would say that they own such equipment, not knowing that has already been pledged to the BDB or some other institutions. You go ahead and give them a loan to get into problems. Therefore you can’t even sell or retrieve the assets.”

He said that assessing loan applicants’ credit score is problematic, as many do not disclose the full extent of their existing indebtedness. This, Mr Cunningham said, was why he favours a credit bureau especially given that the Government-sponsored venture capital fund may ultimately end up being responsible for underwriting $100m in loans in the near future.

Davinia Grant, the Small Business Development Centre’s (SBDC) executive director, said she was “extremely excited” about the credit bureau beginning full operations. She said the SBDC would have been “doing cartwheels” had it been completed already

Ms Blair said a credit bureau and movable collateral registry, the latter of which is also being developed by the Central Bank, are desperately needed in The Bahamas so that good entrepreneurs can obtain a better credit rating and “fight for better rates”.