Ouenniche advocates for sustained funding and tax breaks for small businesses

POSTED: 08/17/11 11:28 AM

St. Maarten – Executive Director of the Small Business Development Foundation (SBDF) Ludwig Ouenniche has said that it will take a multi-faceted approach to ensure that small businesses can start and keep going. Speaking in Parliament on Tuesday he said the approach must include allowing the SBDF to assist the businesses with the set up and administration and also for government to grant tax incentives both to the small businesses and to companies that take on young entrepreneurs that are sent to them as part of training courses.

A red line issue throughout Ouenniche’s nearly three hour encounter with parliamentarians is the cyclical nature of how the foundation is funded. These cycles have led to periods of quiet and the discontinuation of several programs.
“We basically disappear when there is no funding,” Ouenniche said.
At the moment the foundation is surviving off of a subsidy from government, which Ouenniche said is barely enough to pay salaries, rent and utilities, and is running programs with money from projects that fall under the Socio-Economic initiative. In January they will also start receiving funding from the European Union for a project that spans the six Dutch territories and the five British territories. Part of that project for St. Maarten is finances for translating all the country’s laws and regulations.

One SBDF program that has fallen by the wayside, because of lack of funding, is their work to assist potential entrepreneurs in crafting a business plan. That assistance included the services of consultants who were able to train the entrepreneurs in how to successfully present their plan to a financial institution. It also allows businesses to be linked up with lawyers, notaries and accountants to get one on one advice when they run into challenges. With no money left to carry it forward the program has been discontinued, but not ruled out completely.
“We may have to change into an association that has members who pay fees which we can collect and use to fund our programs. We are also thinking that maybe we should try to sell the knowledge and experience we have to other islands in the region,” Ouennniche said.
The SBDF Director could not support an idea from National Alliance MP Dr. Lloyd Richardson that the SBDF should consider setting up some sort of N.V. to guarantee income to sustain its programs. He argued that would cut the foundation off from certain donor funding and would cause the foundation to lose its subsidy from government.

Sustaining small businesses
Though he agrees that entrepreneurs should be well able to defend their business plan in a meeting with a financier in order to get financing Ouenniche has strongly disagreed with the argument that the failure rate of small businesses is a huge threat to commercial banks.
“You can lend one person 10 million and if they go belly up, the bank loses 10 million, but it doesn’t take more than five thousand dollars to set up a business in St. Maarten and if you lend 10 people five thousand, then you are only owed 50, 000 and losing that won’t cause any bank to fail,” the SBDF Director said.
The SBDF Director agrees that young entrepreneurs need more and better training in order to keep their businesses going.
“We need to teach business people here to operate a venture and that before you make money there is a whole bridge to cross. One of the things we also did is to work with Maria Buncamper Molanus when she was Commissioner of Economic Affairs to create a guarantee fund, where we would split the risk between the government and the entrepreneur. That could be pulled off the shelf and be revived tomorrow,” Ouenniche said.

Tax Amnesty
He also pointed out that not having a tax break at the start of the business seriously discourage entrepreneurs as they get the feeling that all the money is spent on taxes and other over head and they don’t get to keep any. Existing small businesses are also struggling under the weight of have to pay assessments that date back to the early 1990s. In order to give them relief the SBDF has requested government grant a taxes for all taxes owed before 2005. The request was put together with assistance from the Foundation Tax Attorneys (BAB) and the amnesty would only be granted if the businesses submit to training and to monitoring. If they did not comply, then they’d have to pay back the full amount.
“We are not proposing a free for all,” Ouenniche said.
The SBDF Director added that they’d been able to prove that once people are brought into contact with someone from the Tax Office and given clear information on the system they become more likely to comply with the rules. A training session several years ago by the SBDF led to 600 businesses signing up. The SBDF is now finalizing a booklet for small businesses that they hope will lead to a more informed small business pool.

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