Covid-19 impact: Many startups, MSMEs stare at closure: Survey

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New Delhi: Many startups and MSMEs are at the brink of closure due to the slowdown in the economy caused by lockdowns and restrictions imposed in various part of the country to contain the ferocity of Covid-19 second wave, according to a survey.

The survey included responses from over 6,000 startups and MSMEs located in 171 districts.

According to a report by Local Circles, as many as 59% of startups and MSMEs surveyed likely to scale down, shut down or sell themselves this year as they are facing a liquidity crunch.

Asked about the months of cash (based on current monthly operating costs) they have on hand, 33% of small businesses said they have only less than one month of cash, whereas 8% are already out of funds.

Only 22% have more than 3 months of runway, and 37% have funds for 1-3 months, it said.

Responding to a question on the outlook for the next six months, 59% of small businesses expect to scale down, or sell off or shut down.

“Of which, 37% said they will scale down their operation, 14 per cent said they might shut down, whereas, 8% would sale off their business in the next 6 months,” the survey noted.

When asked about extending the time for completing government or PSU contracts for 3-6 months, the majority of small businesses — up to 92% — were in the favour.