Small construction contractors in Bermuda can now access up to $200,000 of seed money to help them start building projects.

As long as they are part of the Small Business Service Incubator initiative they are eligible to apply for the reduced-interest loans that have been made available by Butterfield Bank in collaboration with Government.

It is the latest step in providing support to the Island's small construction outfits to help them succeed in the current construction boom.

The bank is making $2.5 million available through its small construction business incubator mobilisation loan. The loans, which will be offered at 1.7 percent over base rate, will be guaranteed by the Bermuda Small Business Development Corporation (BSBDC).

Referring to it as "another step to expanding and providing assistance to the small construction-related contractors", Finance Minister Paula Cox said: "Access to seed capital at the start of a construction contract can sometimes make the difference between success and failure for the small contractor.

"Through this facility, start-up funding for specific jobs will be provided with advantageous terms. With the Butterfield Bank Mobilisation Loan a key need of small contractors is being met."

The small contractor business incubator has been set up to give business practice teaching and advice to the smaller-sized companies on the Island. An initial 15 participants are halfway through the course.

Ms Cox said: "Small construction contractors do not always have the access to necessary seed capital at the outset to make necessary purchases, whether for materials, equipment and salaries prior to the first draw down of the contract."

Butterfield Bank CEO Alan Thompson said the $2.5m being made available for the initiative would be increased if the scheme proves successful and added: "This programme should help small contractors participate in the Island's construction boom."