A law that allows companies to use their personal property as collateral to obtain production loans has now come into force.
The president of the Higher Council of Private Enterprise (COSEP), José Adán Aguerri, stated that on Thursday, October 26, 2017, the Law on Secured Transactions entered into force, which was approved by the National Assembly in October 2016.
In an attempt to reduce costs and improve the use of resources devoted to the subject, a bill proposes integrating into a single institution the organizations dedicated to promoting entrepreneurship.
The aim of the bill is for the current bodies DIGEPYME, INAPYME, PRONAMYPE, FODEMIPYME, PROPYME and CONICIT to be integrated into a single entity and a with single fund to maximize resources, reduce paperwork and costs.
Six financial institutions have been authorized to provide loans under the conditions imposed by the Development Bank, with interest rates of 3% in dollars and in line with the passive base rate in colones.
Welmer Ramos, chairman of the Governing Board of the Development Banking System commented that "... 'These programs involve interest rates that are half the rates that currently exist for the same activities.'"
In Costa Rica a law has been proposed that would benefit tourism businesses suffering from financial problems - caused by the 2008 crisis!! -, readjusting their debts and repurchasing and returning their lost assets.
EDITORIAL
Beyond the dark aspects of the bill - among them that it is not known who the beneficiaries are - its purpose seems rude and unfair to entrepreneurs who managed to overcome the crisis of the last decade through proper management and undoubtedly a lot of sacrifice, and who today have healthy companies.
The balance of loans to microenterprises in the first nine months of the year amounted to $2,662.9 up 32% from the $2,022.8 million reported in the same period in 2013.
The Superintendency of Banks in Panama reports that loans to medium enterprises grew by 6.2% going from $1,772 million reported from January to September 2013 to $1,881 million in the same period this year.
Employers have proposed creating an institute for development representing the private sector and under the Presidency of the Republic in order to serve the needs of the sector.
The government is to make a diagnosis of the activities in the sector in order to review and amend the Law on Promotion, Creation and Development of Small and Medium Enterprises and adjust it to the needs of women, who claim there is a legal gap in the attention they receive from the state.
Mortgage inventories, cash flow, contracts, intellectual property, trademarks, among others, can be used as an alternative option to traditional collateral on real estate.
Additionally, the law passed by the Legislature on April 30, also allows for current assets or rights given in contracts, equipment, accounts receivable, chattels, crops, tourist bookings and even future rights to the value of timber to be taken into account.
Its well known and because it has never been well addressed, the little access to credit for entrepreneurs remains a problem in Central America.
Analysis by David Casasola in his article on the blog of the National Economic Research Center (CIEN by its initials in Spanish) states that "this does not mean that there are no funds available in the banking system for people who want to start a business, but rather that the characteristics of the majority of entrepreneurs (low levels of education, geographic location, lack of assets to support a loan, etc..) are not compatible with traditional banking criteria for a loan and to pay the high interest rates to an agency which is far away from their community. "
The bureaucratic requirements contained in a bill advancing in Congress would continue to hamper access to credit for entrepreneurs.
A few days ago Congress ruled on the Law for Strengthening Development Banking, under which sureties are not required, interest would be low and deadlines for payment would be longer. However, among other things, entrepreneurs who wish to take out a loan would be required to take a training course at the National Training Institute (INA by its initials in Spanish) in order to get a certificate which would allow them to make the appropriate application.
Over 50% of SMEs fail before they are three years old, 90% are no more than five years old and only 10% survive.
In the case of Nicaragua the subject is sensitive, "because 60 percent of its business backbone is made up of micro, small and medium enterprises, which account for 40 percent of gross domestic product (GDP), estimated at more than six billion dollars.
In Costa Rica an agreement between the Chamber of Commerce and the National Stock Exchange facilitates the capitalization of SMEs through the Alternative Market for Shares.
"The Market for Alternative Shares (MAPA in Spanish) is a platform for SMEs with high growth potential to become professional, and to raise capital through the private sale of shares.
With the support of the Banco Multisectorial de Inversiones, the Chamber of Construction expects to boost the sector through the Financial System for Development.
Emphasis will be given to micro and small enterprises so that they can access credit for their projects.
"Angel Diaz, vice president of the Salvadoran Chamber of Construction, CASALCO, explained that until now small companies have had trouble accessing credit from international banks due to conditions and requirements needed in order to approve loans," stated the article in Lapagina.com.sv.
The CII delegation held meetings with businessmen to promote financing for investment projects.
Jacques Rogozinski, general manager of the Inter-American Investment Corporation (IIC), said funds from the CII are available for "any business from a member country which create jobs..", wrote Laprensa.com.ni.
The presidential representative for investments, Alvaro Baltodano, stated that previously, the CII only offered funding for projects over $ 2 million, but now they are making loans starting at $ 100 thousand.
Micro, small and medium sized enterprises have asked the government to create financing incentives.
The proposal seeks to develop the sector and ensure growth in the micro enterprise sector next year.
José Enrique Núñez, president of the Honduran SME Association (Anmpih in Spanish), told Laprensa.hn that, "the proposal will incentivize the opening of the new market and generate an increase in companies' production, thereby creating jobs for many people".