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Monday, 27 April, 2020, 14 : 15 PM [IST]

Most SMEs in India running out of cash: Survey

Nearly half of the country’s small businesses have either exhausted their funds or are close to doing so, as the unprecedented demand crash due to the extended coronavirus-led lockdown forces them to dig into their own reserves, a recent survey shows, reports Economic Times.

The survey by community platform LocalCircles, which covered around 7,000 businesses-including start-ups, small and medium enterprises (SMEs) and entrepreneurs - across the country, showed that 47% of them have either already run out of funds or have less than a month of runway before they exhaust their cash. The survey report was shared exclusively with ET.

About 24% of respondents said they have cash reserves to sustain their businesses for the next one to three months, while 23% said they can sustain themselves for between three to six months.

Only 6% of respondents said their cash reserves will last over six months at the current rate of burn.

On how the lockdown will impact their businesses, 61% of the respondents said they are considering scaling down their operations to deal with the cash crunch. Another 7% said they are considering selling their business, while 13% said they are considering shutting down completely.

Only 13% of respondents said they are looking at growing their business in the current scenario.

The survey comes at a time when the government has barred ecommerce companies from selling non-essential goods in view of the coronavirus pandemic. While it has allowed standalone shops to begin operations in a limited way, the extent to which this will help businesses revive is still dependent on individual states, as they can continue to disallow non-essential businesses in the offline space as well.

Others have pointed out that while broader economic activity could begin after May 3, the proposed end date of the extended nationwide lockdown, the pressure on businesses will continue as consumers and enterprises are likely to cut spending on non-essential purchases. (Source: ET)

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