Advice: How to face the difficult economic scenario due to the step-by-step backward movement of the Plan's phases?

The pandemic has strongly affected small and medium-sized enterprises in Chile, and despite the fact that as of the third quarter of 2021 mobility restrictions have eased, allowing more goods and services to be purchased from SMEs, this impulse has not been enough to return to pre-pandemic dynamism.

This is demonstrated by an analysis released by the Ministry of Economy in July 2021, which determined that employment in small and medium-sized companies registered a drop in the workforce of -8.9% and -6.1 %, respectively.

Given the current context, where the advance of covid-19 has generated multiple phase setbacks, the panorama could become even more complex for SMEs, even leading to legal issues.

About, Mario Espinosaa lawyer for Grupo Defensa, comments that “On December 1, the civil trials, suspended by the constitutional state of exception, were resumed, thereby reactivating the payment requirements and the evidence orders, which could give rise to pending embargoes and auctions. This of course also affects SMEs”.

Mario Espinosa, lawyer of Defense Group

Advice: How to face the difficult economic scenario due to the step-by-step backward movement of the Plan’s phases?

Although there are no longer quarantines in this new version of the step by step plan, it is estimated that in any case there will be complications for SMEs, especially those belonging to areas such as tourism, hotels, gastronomy and entertainment. In order to successfully get around this fence, Mario Espinosaprovides four tips:

Study the contingency: It is important that SMEs carry out an exhaustive analysis of the current scenario, identify the strategic factors of the environment and differentiate between opportunities and threats. We must remember that crises are not always a threat, but can also be a possibility to generate improvements.
Obligations: The payment of salaries, taxes and complying with those suppliers that are strategic and that allow the continuous operation of the SME must be prioritized. The foregoing must be framed in the preparation of a realistic and concrete budget.
Financing: correct financial tools must be detected and used, such as state-guaranteed loans. Likewise, one must be cautious when opting for other financing channels such as leasing, since they affect the future liquidity of the company.
Debts: Let’s not let time pass to pay outstanding debts. Today there are legal tools that allow them to be reorganized administratively, such as the SME Statute, a mechanism that avoids falling into a state of insolvency. On the other hand, for those SMEs that cannot overcome the above, there is Law 20,720 (Insolvency Law) through which a liquidation or bankruptcy can be generated in an orderly manner, thus allowing the financial rehabilitation of the owner of the company.

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