Coronavirus: Start-Ups, SMEs Scramble For Cash As Disruption Hits Hard

A Local Circles Survey found that only six per cent were covered, in terms of cash, for a period of more than six months.

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By Debroop Roy


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As an expected fallout of the Coronavirus outbreak and subsequent lockdowns, start-ups and small and medium enterprises (SMEs) in India have already begun to feel the heat of business disruption, as per a survey by community platform Local Circles.

The survey received more than 13,970 responses from start-ups and SMEs in over 90 districts.

It found that only six per cent were covered, in terms of cash, for a period of more than six months. 23 per cent said the available runaway was between three and six months while for 24 per cent, the remaining cash will only last them one-three months.

A staggering 20 per cent said their cash would last them less than a month while 27 per cent are already out of funds.

Outlook For Business

When asked about what they see happening to their respective businesses in the next six months, 61 per cent said they were planning to scale down. 13 per cent said they would to grow, same as the number that said they would shut down.

Seven per cent even said they were looking to sell their business.

According to multiple reports, even heavily capitalized players, including Unicorns such as Facebook-backed Meesho and Udaan in India's start-up ecosystem, have resorted to downsizing since the pandemic put a stopper on regular activities.

Seeking Help

Last month, start-ups and SMEs had via Local Circles submitted various demands to the government in order to wade through the crisis. The demands include 50 per cent of employee salaries for one month or a one-time INR 20 lakh grant for those registered with the government.

Expediting payments from public service units, large corporates and the government, processing TDS refunds for the last fiscal year within 15 days and enabling CSR funds to be deployed into start-ups were some of the other demands.

Earlier in April, several start-up founders, venture capitalists and other stakeholders sent a joint letter to Indian Prime Minister Narendra Modi, asking for help with salaries for six months, interest-free loans and tax benefits among other things.

Debroop Roy

Entrepreneur Staff


Covering the start-up ecosystem in and around Bangalore for Entrepreneur. Formerly an energy reporter at Reuters. A film, cricket buff who also writes fiction on weekends.

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