What about small businesses during the COVID-19 crisis?
Real Estate

What about small businesses during the COVID-19 crisis?

Small businesses which are part of the supply chain of larger companies need to have a dialogue with their buyers which are large corporations whether they can be provided safety protocol gear and facilities to adhere to production schedules. Fertilisers, chemicals, pharmaceuticals, municipal corporations, defence, etc, are already working by observing safety protocols. Industrial estates and complexes can also similarly make it mandatory for their zones to have an understanding on mandatory conditions to be followed. Here, the penalty would be that the discovery of a single infected person could bring the entire complex under a lockdown by the authorities. Hence, only very responsible companies which are part of such complexes can take this call.

Small businesses are being constantly reminded that they should not retrench employees but they do not have any means of keeping afloat. The deferment of EMIs  for three months is a definite good step but the offer of payment of Provident Fund dues by the government has riders which exclude several small businesses. Loans to small businesses are not provided without security though the government is intending that banks would act otherwise. Extending greater loans for keeping small businesses afloat may also seep the enterprises into debt as the model of their businesses may not stand the test of time with the revised decline in demand post-COVID-19 scenario. Entrepreneurs need to examine the breakeven point under revised circumstances and assume the responsibility of further debt.

Relief must include ease in compliance of GST, leniency in NPA norms for banks, tax filing firms to be provided with an additional 50 per cent working capital limit on their existing limits without any additional security, etc. Demand for all non-essential items will take a beating, and therefore, several companies need to essentially decide whether they can sustain the deficit and whether their business can spring right back soon after or would the demand just collapse or evaporate. A relief package for sustaining small businesses is in the works and must help address their liquidity issues on an urgent basis without too much of red tape. There is also an urgent need to refund taxes and incentives to exporters must be released.

Also read:
How to restart the economy during COVID-19 
Is the government doing enough to handle the crisis? 
Construction and Infrastructure can kickstart the economic engines
How will the future Post-COVID19 unfold? 

About the Author: A chartered account by qualification, Pratap Padode is the founder of ASAPP Info Global Group and his passion for infrastructure over last 20 years is reflected in the innovative thought leadership through 10 specialised journals, conferences and awards organised in the fields of construction, infrastructure and engineering. CONSTRUCTION WORLD was the first journal that he began with over 20 years ago. Further, he is the Founder & Executive Director of FIRST (Foundation of Infrastructure Research Studies Training ), which was set up in 2003, that brings out research reports and newsletters on various infrastructure segments. He received the CIDC Vishwakarma Award 2010 for his research in the construction sector. Since early 2014, he has been promoting the cause of smart cities in India and is now Founder & Executive Director of the Smart Cities Council India.

Small businesses which are part of the supply chain of larger companies need to have a dialogue with their buyers which are large corporations whether they can be provided safety protocol gear and facilities to adhere to production schedules. Fertilisers, chemicals, pharmaceuticals, municipal corporations, defence, etc, are already working by observing safety protocols. Industrial estates and complexes can also similarly make it mandatory for their zones to have an understanding on mandatory conditions to be followed. Here, the penalty would be that the discovery of a single infected person could bring the entire complex under a lockdown by the authorities. Hence, only very responsible companies which are part of such complexes can take this call. Small businesses are being constantly reminded that they should not retrench employees but they do not have any means of keeping afloat. The deferment of EMIs  for three months is a definite good step but the offer of payment of Provident Fund dues by the government has riders which exclude several small businesses. Loans to small businesses are not provided without security though the government is intending that banks would act otherwise. Extending greater loans for keeping small businesses afloat may also seep the enterprises into debt as the model of their businesses may not stand the test of time with the revised decline in demand post-COVID-19 scenario. Entrepreneurs need to examine the breakeven point under revised circumstances and assume the responsibility of further debt. Relief must include ease in compliance of GST, leniency in NPA norms for banks, tax filing firms to be provided with an additional 50 per cent working capital limit on their existing limits without any additional security, etc. Demand for all non-essential items will take a beating, and therefore, several companies need to essentially decide whether they can sustain the deficit and whether their business can spring right back soon after or would the demand just collapse or evaporate. A relief package for sustaining small businesses is in the works and must help address their liquidity issues on an urgent basis without too much of red tape. There is also an urgent need to refund taxes and incentives to exporters must be released. Also read: How to restart the economy during COVID-19  Is the government doing enough to handle the crisis?  Construction and Infrastructure can kickstart the economic engines How will the future Post-COVID19 unfold?  About the Author: A chartered account by qualification, Pratap Padode is the founder of ASAPP Info Global Group and his passion for infrastructure over last 20 years is reflected in the innovative thought leadership through 10 specialised journals, conferences and awards organised in the fields of construction, infrastructure and engineering. CONSTRUCTION WORLD was the first journal that he began with over 20 years ago. Further, he is the Founder & Executive Director of FIRST (Foundation of Infrastructure Research Studies Training ), which was set up in 2003, that brings out research reports and newsletters on various infrastructure segments. He received the CIDC Vishwakarma Award 2010 for his research in the construction sector. Since early 2014, he has been promoting the cause of smart cities in India and is now Founder & Executive Director of the Smart Cities Council India.

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