Survive Till the Next Sunrise: How can SMEs Survive Amidst COVID-19?
Hope.
We are going through an extremely tough time due to the spread of COVID-19 and HOPE is all we have to keep on moving. As an SME owner, you are gripped with panic, fear, and doubt; anticipating the worst for your business. Over the past few weeks, article headlines continue to instill fear among us about the ultimate repercussions in the aftermath of COVID-19.
Bursa Malaysia continues to slide to 11-year low – by The Star, 20th March 2020
Crude surplus sends oil plummeting to a 17-year low – by FMT news, 30th March 2020
Many small retailers expected to close shop soon – by The Star, 31st March 2020
To know more about our economic status, read COVID-19 Outbreak: Is the Malaysian Economy in Trouble?
Aids and Assistance to Help SMEs to Survive
All SMEs are more or less going through a shortage of cash due to the implementation of the Movement Control Order (MCO). People’s movements are restricted, shops and offices are shut down, eventually impacting businesses of all nature. The following aids and assistance are a way to restore hope in SMEs to fight through this difficult time.
First Economic Stimulus Package
The Government is working very hard to help SMEs to sustain in the market. During the early onset of COVID-19 outbreak in Malaysia, the Government has initiated to cap your business losses by introducing an Economic Stimulus Package 2020 on 27th February 2020.
The Package intends to aid affected businesses such as tourism-related businesses, hotels, airlines, tour companies, manufacturing, and even construction. The Government hopes to regain financial stability through this Package to sustain this volatile economy.
Moratorium on Loan Repayments
To further instill hope and promote confidence among the business owners and homeowners, Bank Negara Malaysia (BNM) has offered a 6-month breather of bank loans to both businesses and individuals. Now, you can defer your business loans and your home loans for 6 months beginning from 1 April 2020. This will help you to focus on more important expenses to survive through the volatile market. However, the catch is, if you decide to defer your loan, simple interest will be added to your outstanding loan during the deferred period. So, in the end, you will be paying more than you were initially anticipating which will eventually add to your overall cost.
Second Economic Stimulus Package
On 27th March 2020, RM 250 Billion worth PRIHATIN Economic Stimulus Package was announced by the Prime Minister of Malaysia, Tan Sri Muhyiddin Yassin. It is an effort to continue stabilizing both the household and financial infrastructure of the country.
The Government has allocated a fund of RM 4.5 Billion to SMEs and micro-entrepreneurs who are struggling to survive during this turbulent economy. The Government has also deferred the income tax for businesses by 3 months, starting from 1st April 2020.
Know more about the Benefits of the PRIHATIN Economic Stimulus Package for business industries here.
Special Package for SMEs
Just 10 days after the PRIHATIN Economic Stimulus Package, our Prime Minister, Tan Sri Muhyiddin Yassin announced this special package on 6th April 2020. The Package will specifically help those SMEs who have experienced extreme losses due to the MCO implemented by the Government.
The RM 10 Billion Special Package includes wage subsidies, financing assistance, moratorium and discount on office rentals to help your business recover from the sharp impact of COVID-19.
Know more about the Special Package for SMEs here.
Is the Help Enough for All Businesses to Survive?
Probably not! And the possible reason may surprise you. According to the SMEinfo Portal (a centralized online information repository on SMEs), there is an estimate of 907,065 registered SMEs in Malaysia. The Government cannot provide sufficient financial assistance to help all the businesses to sustain in the market even with the latest announcements of initiatives.
SME Association of Malaysia (SME Malaysia) has recently conducted a survey on the current financial situation of SMEs. It was a shock to find out that the Government assistance through the Stimulus Packages can only help about 26.3% of SMEs to sustain their business despite the additional disbursement of RM 100 Billion of financing to SMEs under the PRIHATIN Economic Stimulus Package. The remaining 73.7% of SMEs have yet to apply for any special relief funds or alternative financing to sustain in the market. Hence, we need to support each other to survive this dark time.
The secret to survival is to maintain a healthy cash flow for your business. With banks easing up the financing process, you might be hoping that you can manage funds to recover your business during this period.
But, it is FAR from easy. Let us find out why!
Roadblock for SMEs to Raise Funds
You are in pursuit of survival to pass though this bad phase of the pandemic. Maybe you are hoping to survive this critical time by taking financing from banks. Unfortunately, it is not that easy. Tourism, airlines, and retailers of non-essential goods are currently considered as high-risk businesses by the banks as they are the most impacted by COVID-19. Thus, banks are restricting financing to these companies as they are considered to have a higher chance of defaults on their loan repayments.
On top of that, most commercial banks are disbursing the Economic Stimulus Package to their existing clients only. This is restricting resources for SMEs who do not have any existing financing records with their banks. This has put your business in a very tight position. It seems like there are ample resources to raise funds for your business, but when you look closely, the chances seem to get thinner with every step.
Then again, getting funds approved by the banks is never easy. You need to provide a long list of documents, pledge certain collaterals such as physical assets or even cash while enduring a long waiting period to acquire your fund. Unfortunately, time is not a luxury that you have right now. You need a quick and easy way of financing to keep your business moving. In such a scenario, you might consider alternative financing to get out of this tough spot.
How CapBay can be your SOLUTION!
Right now, you are probably experiencing a sharp drop in sales and longer payment terms from clients. Moreover, all your cash flow is slowly draining as you have to pay for your usual expenses such as rent, staff salaries, and other overhead costs.
In such instances, even if you get new orders, you may not have the fund to complete it right away. This is where CapBay comes in to help you. CapBay is a Supply Chain Financing (SCF) company that offers Invoice Financing Facility to businesses. We understand that you are going through a critical phase but with our easy and quick financing solution, we can help you to survive in your time of need.
Say, when you invoice a client after completing an order, rather than waiting for a long payment term to get your money, you can simply come to us. We offer 80% instant cash based on your invoice. Plus, our services do not have any setup costs or hidden costs to pile up on your expenses.
This extra fund will fulfill your need for emergency cash. You will literally leverage your sales invoice to get money. This will not only shorten your payment term from customers but will give you enough cash to sustain the volatile market.
So, don’t lose hope. Survive this time of uncertainties by making Smart Financing Choice. We are just a click away. Our consultants are here to help you if you have any questions.
