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Economic Contraction
Home›Economic Contraction›“ Most SMEs and SMIs urgently need help getting back on their feet ”

“ Most SMEs and SMIs urgently need help getting back on their feet ”

By Amber C. Lafever
May 26, 2021
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Through In view of Majola 2h ago

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DURBAN – Most of South Africa’s small, medium and micro enterprises (SMEs) were in distress and needed urgent help to get back on their feet, according to the Covid-19 Business Rescue Initiative (Cobra).

Cobra, the nonprofit established a year ago that focuses on assisting SMEs, said SMEs based in Gauteng, Western Cape and KwaZulu-Natal had been hit the hardest. by Covid-19 and the resulting lockdowns. He said the sectors most affected by the lockdowns were retail, construction, manufacturing, tourism and hospitality.

Cobra COO Bob Grewar said companies need all the help they can get as they navigate an uncertain future in an increasingly constrained economy.

“South Africans are resilient people who continually adapt in the face of challenges and change. Together, we can use innovative, local digital resources, such as SMMEstart, to help businesses that stand after the worst economic contraction our country has seen in over 90 years, ”Grewar said yesterday.

According to Cobra, 72% of the companies that requested it were SMEs employing between one and 10 people.

Among the companies that applied for funding, Cobra’s information portal found that the most immediate need for financing was required by companies with annual turnover between R0 and R100,000, with 27% of candidates falling into this category, followed by companies with annual turnover. from 500,000 to 1 million rand, or 22 percent of applicants. Firms in the latter category were particularly important to the economy if they could be supported to survive and thrive beyond the annual turnover of R1m, as VAT became payable on their turnover, which enabled them to play an even more useful role in growing the economy and providing jobs.

Cobra said access to finance was the biggest obstacle faced by SMEs. This was the result of a number of factors, including the high risk profiles of candidate SMEs, the lack of assets that could be used as collateral, and the lack of a clear and viable business plan.

Up to 62% of businesses that requested help through Cobra did not first fund or support their banks, indicating a new trend illustrating a lack of confidence in traditional banking and financial structures and requirements in loan matters.

Cobra said there is hope for SMEs in distress with SMMEstart, a WhatsApp-based business rescue consulting platform backed by Google. org who joined Cobra as one of its partners.

Cobra and SMMEstart have offered SMEs the best actionable business support and rescue information and resources on an intuitive and accessible platform to help them recover from the effects of Covid-19.

Already, 10,000 users had interacted with SMMEstart. Business owners can access SMMEstart by saving the number +27 600 110 110 in their contacts and sending the word “Hi” to start chatting.

Last December, a report released by financial services firm Finfind revealed that SMEs had suffered the brunt of the country’s foreclosure.

The study, which was published in conjunction with the Ministry of Small Business Development and a number of business groups, was based on a survey of 1,489 businesses across all major sectors.

The study found that in the first five months of foreclosure, 76.2% of the companies surveyed experienced a significant drop in revenue, 35.2% had cash reserves saved, and of these, 62 , 6% thought their cash reserves would last between one and three months. However, only 29.2% of businesses were confident they could pay their expenses the following month.

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