SMEs seek another round of relief on debt as virus restrictions destroy cash flows

Small and medium enterprises (SMEs) are seeking fresh relief on their debt servicing and other operational impediments, which they increasingly confront due to the business and job killing restrictions imposed by authorities to slow the spread of COVID-19. 

According to a cross section of the heads of business chambers representing mainly the small and medium scale enterprises, operations and finances of a large section of their members are significantly hamstrung for little more than a month now as employees do not return to work due to fear of getting COVID-19, and orders have evaporated due to restrictions on consumer activities, all of which is putting pressure on their working capital. 

“Among the issues that I hear the most are the pressure on working capital of our members who are mostly exposed to the domestic market,” said Abeyratne Muthugala, Secretary General of Ceylon National Chamber of Industries (CNCI).

There is expectation for the Central Bank to announce another round of relief on debt servicing on select businesses, specially those who are exposed to the domestic economy as local consumer activity has come to a virtual standstill as nothing more than food staples are being sold at the moment.   

Mirror Business early this week reported that banks were getting a huge number of requests from SMEs seeking some form of redress on their monthly loan installments.  

Meanwhile, CNCI is waiting until their members come up with all the issues and the grievances before they take the matters up with the authorities in earnest, seeking redress to ensure that these companies operate with less hindrance.

According to Muthugala, one of their primary requests was to prioritise the factory employees when administering vaccines so that they could feel safe to return to work. 

“The authorities have to understand that work from home arrangement doesn’t work for factory-based staff who have to be in-person on the floor for production to happen seamlessly”, he noted. 

Meanwhile, another chamber chief requesting anonymity said that most of the members expect some form of relief on their debt and other operational issues, and are awaiting to see what the government would do before making representations.

Certain functions of some private sector companies have completely hindered due to the dysfunctional State sector, of which employees were given extended holidays, yet early pay checks for May, on top of being asked to work from home.