The government of Bermuda has introduced a letter of credit (L/C) based scheme that will make it easier for the island's small businesses to import goods.

The Bermuda Economic Development Corporation (BEDC) is introducing the scheme in partnership with HM Customs.

L/C guarantees

The partners have essentially allocated 200,000 Bermudan dollars (BM$200,000) in funds annually to be used to facilitate lines of credit in amounts up to a maximum of BM$10,000 to assist businesses importing goods for retail sale on the island.

The BEDC will offer a 100 per cent guarantee on L/Cs so that qualified applicants secure an HM Customs line of credit to defer payment of duty.

Overcoming difficulties

This aims to overcome a current difficulty faced by importers, which is that financial institutions require L/Cs to be secured by cash, which is prohibitive to most small businesses.

Under the new scheme, approved retailers are not required to provide monetary security to HM Customs for any duty deferred.

Pilot programme

An approved retailer is simply required to furnish HM Customs with an L/C from a bank or other financial institution in Bermuda guaranteeing payment of a specified amount of duty that may be deferred by that retailer under the approval given by the Collector.

This is a pilot programme that will be assessed after one year.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.