Consequences of the COVID-19 epidemic have been felt around the world.
Not only is it a public health issue but its impact on economies has been profound and costly.
In addition to disrupting production sectors. SMEs account for half of all income generated by UK businesses and employ 44 per cent of the workforce.
The staggering cost of Covid-19 is not only a burden to small business owners, but it also could have major implications for the future economy.
With 6million SMEs in the UK, accounting for over 99 per cent of all businesses, 33 per cent of employment and 21 per cent of all turnover.
This £126.6billion hole in their books has left many with an uncertain outlook on how they will survive if faced with such high costs as well as increased financial instability.
How are these critical sections of the economy faring because of the Covid-19 pandemic, which has caused a catastrophe that has affected both lives and livelihoods?
Post-Covid Business Recoveries: Exploring New Opportunities
Countries have put measures in place to help SMEs because of the unique circumstances they are currently facing.
While public health is the primary concern, a variety of actions are being implemented to reduce the economic impact of the coronavirus outbreak on businesses.
Many governments are taking immediate steps to help SMEs and self-employed people during this difficult time with a particular focus on programs to maintain short-term liquidity.
These policies come in a variety of shapes and sizes.
Many governments have enacted and expanded policies to encourage commercial banks to lend to small businesses.
Central banks in certain countries have eased reserve requirements for banks, allowing them to expand their lending.
In other circumstances, central banks have purchased loan packages from SMEs and others to stimulate further lending using unorthodox monetary policy tools.
Direct Lending to SMEs
A substantial number of governments have increased direct funding to SMEs in addition to giving guarantees to commercial banks to support their SME lending.
New loan instruments have been created.
In other circumstances, existing disaster relief mechanisms are made available to SMEs affected by the Covid-19 crisis.
In certain circumstances, the remedies include increasing the amount of cash available for loans or making loan schemes more accessible by expanding the pool of possible beneficiaries, simplifying, and speeding up loan application procedures, and giving more favourable terms and lower interest rates.
Grants and Subsidies
A number of countries, regions, and towns have begun to offer direct financial assistance to small businesses. In many circumstances, these are lump-sum payments, while in others, they are tax exemptions.
In some circumstances, new instruments with a solidarity fund are being developed to assist microenterprises with cash flow issues.
The Emergency Fund, which provides direct financial assistance to SMEs and self-employed individuals, is being utilised to encourage small businesses to retain their personnel.
Some countries direct financial assistance to companies or sectors that are critical to the pandemic’s prevention and containment.
Others offer lump sum payments to SMEs and self-employed people.
The amount of money given to SMEs varies greatly, as do the requirements for applying.
Some governments have taken steps to assist SMEs in adopting new work procedures, accelerating digitalisation, and expanding their market reach.
Such policies attempt to solve immediate short-term difficulties while also contributing to the structural development of SMEs and supporting their future growth.
These policies are especially important because SMEs are less likely to be able to adopt new technology and procedures.
Simultaneously, encouraging the adoption of new technologies and techniques may help companies improve their post-crisis competitiveness and ability to deal with issues.
Efforts to Locate New & Different Markets
Some countries have taken steps to assist SMEs in regaining market share or discovering new or alternative markets.
Existing financial mechanisms for SMEs, such as the SME growth subsidy, exist to assist businesses in finding alternate markets, particularly if supply chains are damaged.
Others are encouraging large corporations to work with SMEs by expanding their financial support.
Supportive Measures for Innovation
Similarly, countries provide assistance to SMEs seeking to innovate.
These steps are intended to assist start-ups and SMEs in finding solutions to the Covid-19 outbreak.
In other circumstances, assistance is provided to help SMEs improve their innovation and competitiveness, allowing them to better survive the effects of the crisis.
Supportive Measures for Training & Redeployment
In response to the pandemic, several governments have opened existing programs for SMEs’ training and skill development, as well as launching new initiatives.
Enabling SMEs to preserve access to skills and develop new ones during the crisis is an important part of the necessary structural policy response to the crisis.
In addition to the regular challenges of running a business, Covid-19 is affecting SMEs in a number of different ways.
Capitalising in midst of Covid-19 is not as simple as it may seem. SMEs require assistance to help them maintain profitability during challenging times such as right now, when many are struggling with high overhead costs that they cannot control on their own.