Public purchases: mypes stop billing more than S / 600 million due to inaction by the Government

13% of SMEs in Latin America abandoned the market: What was the reason for this?

The Association of Small Business Unions revealed that more than 500,000 Peruvian SMEs have gone bankrupt, closed or migrated as a result of the crisis caused by the . At the level of the fintech Rextie highlighted that formal and informal SMEs were greatly affected by the pandemic, which led to at least 13% of will leave the market.

The main causes that SMEs have faced and that have led them, in some cases, to bankruptcy are: reduced and disorderly cash flow, high level of indebtedness, delays in payment of commitments and restricted access to financial services.

SMEs are considered the main agents to promote and increase the potential growth of Latam. However, apart from their internal struggle (within their line of business) they also have important external challenges and obstacles that they must deal with, such as: new threats from the COVID contagion waves, rising interest rates and inflation, a widespread indebtedness, increased informality and a greater increase in poverty”, highlighted Eli Casaverde, head of trading at Rextie.

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Along these lines, the solution for SMEs to maintain their permanence in the market is that they must generate value and know how to differentiate themselves, so they must work to improve their financial capacity and their access to working capital, access state promotion programs, accelerate the digitalization of its sales, collection and payment processes, make strategic alliances with suppliers and customers and expand its commercial horizon to the international market.

With the application of coherent and coordinated policies, SMEs could be agents of structural change through their contribution to increased productivity.

Given this context, the exchange Fintech states that the current government should focus on having greater public debt, increasing efficiency, rescheduling debts, reducing taxes or providing greater tax benefits, implementing employment promotion programs, increasing credit guarantees, providing training and technical assistance.

To conclude, it must be taken into account that SMEs constitute an essential component in the productivity of the entire region, representing around 99% of all companies and allowing the employment of more than 67% of all workers.

However, its contribution to GDP remains relatively low, revealing shortcomings in its management and productivity levels.

“In order to directly face the lack of liquidity, SMEs have to make important changes in their financial leverage structure, through access to new forms of financing such as: Factoring, crowdfunding, state-guaranteed loans, microcredits and, not least, to receive specialized advice”, Casaverde concluded.


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