Urgent reforms needed to aid small biz

he chief executive officer of the Small Business Association (SBA), Dr Lynette Holder has issued a strong call for urgent reforms to modernise the legislative and financial framework governing small businesses.

 

Speaking on the sidelines of a church service on Sunday marking the start of Small Business Week, she suggested an update of the law governing small business growth which has not been amended in 18 years, as she urged the faster implementation of policies to ensure small enterprise survival.

 

“For some time now, we’ve been advocating that there’s a need to amend the Small Business Development Act,” Holder said. “The last amendment was in 2006, and in 2024 it’s not fit for purpose.”

 

One of the key aspects of the law is a 5.5 per cent preferential tax rate for small businesses, which Holder described as a valuable incentive. However, she questioned whether the legislation needs updating to improve access to this benefit and make it more meaningful.

 

“To pay 5.5 per cent on taxable income is definitely an incentive, but how do you access it? You must be on a full small business register,” she explained. Holder called for a review of the conditions required to qualify as an approved small business, noting that if the tax rate remains at 5.5 per cent, further incentives may be necessary to support these businesses.

 

Beyond tax reform, the SBA boss highlighted the need for broader access to finance, pointing out that while initiatives like the Trust Loan Fund are helpful, they are not sufficient. She urged the introduction of more diverse financial solutions for small businesses, especially those looking to scale up.

 

“Beyond the Trust Fund and beyond seed capital, what else? You cannot just have a few agencies providing seed capital. You must have a wider spread of financial solutions,” she said.

 

She also expressed frustration with the slow progress in developing a junior stock market for small businesses, an initiative started in collaboration with the Barbados Stock Exchange in 2019.

 

Although the Caribbean Development Bank has provided partial funding, Holder lamented the delay in implementation, declaring: “It is like molasses going up a hill. While the grass is growing, the horse is starving.”

 

She was also critical of the sluggish pace of policy implementation, calling it a significant barrier to the growth of small and medium-sized enterprises (SMEs).

 

“We get great announcements and pronouncements, but access to these issues continues to be the problem. How do we get policymakers to understand that we cannot take three, four, or five years to enact one policy?” she queried.

 

Holder also raised concerns about the Collateral Registry, a mechanism introduced in 2017 to help small businesses secure financing using non-tangible assets like intellectual property. She noted that after some initial reforms, the initiative has stalled, leaving businesses without an important tool.

 

She said: “The collateral registry was more or less dusted off and reformed but seems to have now died a sudden death. Nothing is being said about the collateral registry at this time. And that was a mechanism that would help firms to be able to access financing using non-tangible assets. Where is that today?”

 

The SBA chief also called for a more supportive business environment, citing regulatory hurdles and bureaucratic inefficiencies as ongoing obstacles. “It just takes too long for things to be done in this country. The intended beneficiary doesn’t benefit because of the length of time it takes.”

 

She also addressed the issue of regulatory compliance costs, pointing out that while businesses are willing to comply, the associated costs and red tape often make it difficult.

 

“There’s a lot in government’s hands to make the business community more enabled to grow, be competitive, and thrive,” she said.

 

Holder called on policymakers to act swiftly to address these concerns, noting that Small Business Week provides an opportunity to raise national dialogue around the sector.

 

Despite the challenges, Dr Holder commended the resilience of small business owners, recognising their vital contributions to the economy.

 

“We are very, very pleased with the men and women who have stepped up, launched their businesses, and are working day in, day out to manage those operations, feed their families, and bring goods and services to the market,” she said.

 

Small Business Week, which ends on Saturday, is marking its 21st edition. Organised by the SBA, this year’s theme is Celebrating Our Achievements, Striving for Excellence. The week’s events will include workshops, networking opportunities, and the annual Leo Leacock Memorial Lecture, celebrating entrepreneurship and innovation.