Small, Medium and Micro Enterprises (SMMEs) were in distress and required urgent help to get back on their feet, according to the Covid-19 Business Rescue Initiative (Cobra).
Cobra, the year-old non-profit organisation focused on assisting SMMEs, said that SMMEs based in Gauteng, the Western Cape and KwaZulu-Natal had been the hardest hit by Covid-19 and the consequent lockdowns. It said the sectors bearing the brunt of the lockdowns were retail, construction, manufacturing, tourism and hospitality.
Cobra’s chief operating officer, Bob Grewar, said businesses would need all the assistance they could get as they navigated an uncertain future in an increasingly constrained economy.
“South Africans are resilient people who continuously adapt in the face of difficulty and change. Together, we can use innovative and home-grown digital resources, such as SMMEstart, to assist those businesses left standing after the worst economic contraction our country has seen in over 90 years,” Grewar said yesterday.
According to Cobra, 72 percent of the businesses that approached it for support were SMMEs employing between one and 10 people.
Of the businesses that requested funding, Cobra’s insights portal revealed that the most immediate need for funding was required by businesses with an annual turnover of between R0 and R100 000, with 27 percent of applicants falling into this category, followed by businesses with an annual turnover of R500 000 to R1 million, which comprised 22 percent of the applicants. Businesses in the latter category were particularly important to the economy if they could be supported to survive and thrive beyond the R1m annual turnover mark, because VAT became payable on their turnover, thereby enabling them to play an even more useful role in growing the economy and providing jobs.
Cobra said access to funding was the biggest hurdle faced by SMMEs. This was the result of a number of factors, including the high risk profiles of the applicant SMMEs, the absence of assets that could be leveraged as security, and the lack of a clear and viable business plan.
Up to 62 percent of businesses that sought assistance through Cobra did not first funding or assistance from their banks, signalling a new trend depicting an absence of trust in traditional banking and finance structures and lending requirements.
Cobra said there was hope for SMMEs in distress with SMMEstart, a WhatsApp-based business rescue advisory platform supported by Google. org that has joined Cobra as one of its partners.
Cobra and SMMEstart offered SMMEs the best actionable business support and business rescue information and resources on an intuitive and accessible platform, to aid them in their recovery 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 to their contacts and sending the word “Hi” to start chatting.
Last December, a report published by financial services company Finfind revealed that SMMEs had borne the brunt of the country’s lockdown.
The study, which was published in collaboration with the Department of Small Business Development and a number of business groups, was based on a survey of 1 489 businesses across every major sector.
The study showed that in the first five months of lockdown, 76.2 percent of businesses surveyed experienced a significant decrease in revenue, 35.2 percent had cash reserves saved, and of these, 62.6 percent thought their cash reserves would last between one and three months. However, only 29.2 percent of businesses were confident they could pay expenses the following month.