Small firms upbeat despite pandemic

Small businesses hardest hit by the government’s Covid-19 lockdown are optimistic their enterprises will survive the health crisis despite little support from the government, banks and landlords.

According to a recent survey by Cape Town-based Retail Capital, a firm that offers funding and asset finance to small businesses in SA, 86% of small and medium-sized enterprises (SMEs) stated that their business will survive the pandemic. This is despite the majority not receiving relief from their landlords or financial institutions during lockdown. Most of them (73%) also did not earn an income as they could not trade.

The government’s stringent measures to curb the spread of the coronavirus led to the collapse of many small businesses that did not have large enough cash buffers to remain afloat during the lockdown, which restricted trade. Many more remain on the brink of collapse despite the government moving to open the economy.

In May, the government introduced a R200bn guarantee scheme to help businesses. This was part of SA’s R500bn economic stimulus package and was targeted at companies with turnover of R300m or less per year. However, concerns were raised about the scheme’s failure to reach small businesses, many of which do not meet the strict funding criteria set by banks.

SA SMES HAVE SHOWN THEIR METTLE AND RISEN TO THE MANY CHALLENGES THAT THE PANDEMIC HAS THROWN AT THEM

The survey by Retail Capital gathered the views of 324 business owners across the country operating in industries including food & beverage, building & construction, hospitality, tourism and travel. The majority of those surveyed ( 86%) said their business will survive the pandemic, citing moves to unlock new revenue streams.

“Despite all the odds, SA SMEs have shown their mettle and risen to the many challenges that the pandemic has thrown at them. They adapted to the situation and found solutions to their problems, in many cases creating opportunity out of adversity,” said Retail Capital CEO Karl Westvig.

According to the survey, small business owners are looking at how they can unlock other opportunities and turn their current operations around. Almost 40% of those surveyed reported that they had changed their business in some way since lockdown. Among those businesses that did close, 34% said they would open a new venture and 75% reported learning something from lockdown that they will apply in their business.

Instead of retrenching staff, 61% of business owners surveyed put employees on short time or reduced salaries.

Of the 68% small business owners who have premises, only 34% enjoyed a rental holiday. This coupled with a salary bill during a time of no income put a serious strain on their savings and personal pockets, Westvig said.

When it came to financial support, the banks did not come to the party either; of the 44% of SMEs that applied for financing, 16% received helps. Similarly, while 47% applied for the Temporary Employee/Employer Relief Scheme, 35% enjoyed some relief.

“It is astounding that, while our SMEs did everything they could to keep some sliver of light on in their business, the financial institutions who could have offered support largely did not come through for them,” Westvig said.