Business Development Centres (FAQs)
1. What would be the minimum duration for the building lease?
3. Can the commercial banks be a part of the consortium?
4. If the commercial banks are not a part of the consortium, as associates what will be their role?
Business Development Centres (FAQs)
It is not clear if this relates to a tenant lease or in the case of a building as part of the consortiums commitment being given on a lease basis to the BDC so we will answer both.
- In the case of tenant leases: A minimum lease for an office unit may be as short as six weeks. This would accommodate an entrepreneur and potential incubatee enough time to do some research or complete a business plan. In the case of an incubatee lease terms of three months may be acceptable but provision for three, six 12, 24 and 36 month leases should be made to reflect the different requirements of clients
- In the case of consortium leasing to the BDC: The lease should be long term to reflect an ongoing commitment 20 years + with a break clause on behalf of the BDC to reflect a stage when it may build or purchase its own building. But the exits have to be at the BDCs option in order to demonstrate the consortiums commitment to investing in the BDC.
The consortiums letters of commitment should be addressed to the Head of the SME Support Unit at the Ministry of Economy and Trade.
Commercial banks can be members of a consortium but as profit making and profit taking organisations they cannot be involved in the entity that will receive the grant nor can they be reimbursed from the grant for costs incurred by them. It is envisaged that ultimately a separate legal entity will be established to operate the Business Development Centre (BDC) and this will be a “not for profit taking” organisation. This separation would allow profit taking organisations to be involved strategically but not directly in the entity receiving the grant. The other alternative is that profit taking organisations can be involved as associates rather than partners which primarily allows them to participate in planning and supporting the Business Development Centre with expertise and investment.
Associates can play as significant a role as Partners but cannot be a beneficiary of the grant assistance.
The purchase of lands or buildings is not necessary for the direct implementation of the action as the BDCs do not need to own the land or buildings from which they operate. It is only necessary that they have access to such land and buildings on a rent free basis in order to assist the incubator clients.