Home World Trusts and SMEs

Trusts and SMEs

Fideicomisos y PYMES

PPanama is one of the countries where the trust, as we know it in the Dominican Republic, began a little over 100 years ago, due to the influence of North American legislation. It was a way of betting on an economy that did not depend solely and exclusively on the famous Panama Canal.

That country has been characterized by having a model where the trust is used for business and financial development, rather than for mortgage and real estate development, as is the case in the Dominican Republic. In fact, following this pattern, the trust has been used by many companies in the region as a source of payment and for financing, without using the traditional amount of mortgages or what is known as “solidarity promissory note”.

Hence the importance of bringing this practice to the country, since trusts represent a useful way for SMEs to have alternative financing without compromising their personal assets. Lacking funds, they often fail to comply with the regulations of the Superintendency of Banks, trying to stick to traditional methods, unsustainable for small and medium-sized enterprises.

A successful practice has been that payment flows or future flows, which can be committed in a trust, are used as a guarantee for banks, opening the opportunity to access financing at a good rate and in a reasonable payment period. , keeping the business alive – one of the main problems is that many SMEs go bankrupt – preserving formal jobs and allowing the business to grow over time.

According to data from the General Directorate of Internal Taxes (DGII), in Latin America 99.5% of formal companies are MSMEs, of which 88.4% are micro-enterprises, generating 61% of formal employment. At the local level, by 2020, 240,442 companies classified as MSMEs had registered, this is 98.7% of the total number of registered companies. In general terms, they account for 13% of the economically active population, according to the Central Bank.

The government of President Luis Abinader has itself shown systematic support for the rescue and consolidation of this sector in which 2.2 million people are involved in one way or another, providing direct jobs to 642,000 people.

Abinader has been emphatic that it is a determining business and economic fabric for the country. Mipymes “represent 98% of the business fabric of the Dominican Republic, generating up to 50% of jobs in our country, with a direct contribution to the economy of approximately 38% of GDP,” he said in November of the year past.

In general terms, a MIPYME is born with the focus of survival and not as a bet on the capitalization of an enterprise. Added to the cost of formalization, they remain in the dark for a few years, ceasing to exist due to not being able to access credit. The focused trust can be a key to new opportunities for them.

No Comments

Leave A Reply

Please enter your comment!
Please enter your name here

Exit mobile version