COVID-19 has made headlines for the better part of this year. Countries are struggling to keep the rate of infections in check. Hence, various health measures have been introduced to prevent a surge that would overwhelm the health systems. Despite this, countries have not been spared from its effects from lives being lost to economies being shuttered.
This is why many people are living below the poverty line. According to research, the pandemic is expected to push 88 million to 115 million people into extreme poverty in 2020. Moreover, it is estimated the number will rise to 150 million by 2021 globally.
In the Philippines, the World Bank has estimated the poverty rate to decline to 19.8 %. Therefore, many Filipinos will be left without any source of income. Considering a huge part of the population are entrepreneurs.
Most businesses have been forced to close their doors since the pandemic began. Others are now laying off their staff to mitigate the effects of the virus on their profit margin. Which begs the question of how will keep your MSME enterprise afloat during a pandemic? To find out, continue reading this article.
What are MSMEs Enterprises?
MSMEs refer to Micro, Small and Medium Businesses in the country. These businesses are classified according to the assets they have at their disposal and it ranges between PHP 1 to PHP 100 Million. Here is a breakdown.
Micro-businesses have assets that are worth PHP 3 million while Small enterprises have assets valued between PHP 3,000,001 to PHP 15, 000,000. And lastly, the Medium firms have assets estimated between PHP 15,000,001 to PHP 100 Million. Hence if your firm has assets that fall within the stated range you’re considered an MSMEs Enterprises.
Tips on How to Keep Your Business Afloat During a Pandemic
1. Evaluate and Monitor Your Finances
Finances have a critical part in your business and it can’t run without capital to sustain the daily operations. This is why we recommend the evaluation and monitoring of funds. This is something you can do on your own when balancing the books. The other option would be hiring a financial professional to look at the books.
During the evaluation process, we expect you to check the cash flow. How much money is coming in and going out? Since it’s a business the cash coming in should be more than what is going out. This is what determines your profit margin at the end of each financial year.
To determine the cash flow check your sales, profits, and losses. The next step would be business expenses. This could be rent, salaries, short-term or loan term loans, utility bills among others. All these must be accounted for when evaluating and monitoring your finances. This helps in making an informed financial decision during the pandemic.
2. Cutting down on Expenses
To sustain the business during a pandemic, one needs to cut down on all expenses. The money available has to be budgeted accordingly down to every coin. For starters, you can reduce the number of workers in the business.
If there are employees who offer redundant services, you need to let them go. Though it’s a tough decision the business needs it to remain afloat during these dark times. The other option would be implementing the work-from-home policy.
This applies to employees who don’t have to be physically present for the daily operations to run smoothly. It helps to reduce the operation cost-cutting down on expenses such as utility bills. And the employees will be able to reduce their expenses as well. It’s a win for both parties. Although this seems to be a tough business decision to make, it is what keeps the business alive during the pandemic.
3. Negotiating Your Debts and Payments
Businesses usually run on short-term or long term loans. Whether you want it or not you’ll need a business loan to expand or even purchase an asset for the business. This is why when COVID-19 struck a lot of entrepreneurs were rushing to the banks to get a loan waiver. Thanks to the Bayanihan Heal As One-Act which introduced the 30 day grace period on all loans.
But the Act is not enough; you still need a loan waiver from the financial institutions. Hence, have a sit down with your lender and discuss the new terms of the agreement. You can request for loan discount, extension, or even deferment.
The negotiations also apply to your suppliers and even landlords. The trick is to be open about your financial position and don’t be coercive when stating your case. Who knows you might get a partial or whole waiver?
4. Applying for MSME Loans
Applying for MSMEs loans is the last thing you want to hear about. But let’s face it you need a financial boost to keep your business afloat during the pandemic. Your profit margin has shrunk, and surviving through the dark times is the goal. Therefore apply for the loans and utilize this chance.
During the pandemic, lenders are more flexible and reliable. This is because they offer the loans at relaxed rates one could ever have imagined before. Hence, visit your bank to find out the loan packages they offer.
Apart from the banks, there are other agencies offering MSMEs loans in partnership with the Philippine Government. The top three agencies you can opt for business loans include:
Barangay offers MSMEs loans through the local government and it is called Livelihood Seeding Program/ Negosyo Serbisyo sa Barangay. Though, the agency hand in hand with the Philippine government one must meet all the requirements.
If the organization gives you a green light on your application you stand to receive a loan between PHP 5,000 to PHP 8,000. Apart from the Program, you can also get a loan through DTI’s Small Business Corporation (SB Corp) arm.
II. Pondo sa Pagbabago at Asenso (P3)
This is another platform that allows an entrepreneur to request a loan. Though, to qualify for a PHP 200,000 loan your business must be owning assets not more than PHP 3 Million. The amazing thing is the loan comes with a 1.5 % interest rate monthly. This is flexible to take you through the pandemic.
III. The COVID-19 Enterprise Rehabilitation Fund (ERF)
ERF is another agency for Filipinos to seek a business loan. If the pandemic has crippled your micro or small business ERF is the answer. The agency understands your needs hence they have split their loan packages into two. If you are running a micro-business you can place a loan request for PHP 10,000 to PHP 200,000.
On the other hand, if you have a small business that has assets worth PHP 10 Million. You can request a loan up to PHP 500,000. And the interest rate for the business loan is 6 % annually.
5. Financial Alternatives
However, not everyone will qualify for government loans. This is why we recommend requesting one hour cash loan from Robocash. The online platform offers flexible loans at 11.9%-16% interest rate depending on the loan amount. The loan tenure is also relaxed to ensure you have ample time to repay the debt.
You can request a minimum loan amount of PHP 10,000 for first-timers and a maximum of PHP 25,000 for second applicants. The best thing about Robocash is that they have a 90% approval rate; hence you have a higher chance of receiving the cash during the first application.
Once the loan cash is approved you’ll receive the cash in your account within hours. All you need is your Smartphone or laptop and an internet connection.
6. Taking Advantage of the Digital Platform
The digital platform has become the new marketplace to sell your products. The pandemic has made people glued to their Smartphones and Laptops. This is because it offers them a source of entertainment during the lockdown and curfews. From the TikTok Challenges to Insta Stories and Videos.
Therefore, you’ve a chance to tap into the growing digital market and sell your goods and services. One doesn’t have to visit you physically at the business center. All they need to do is click on the product and it is delivered on their doorsteps. This keeps them safe and your business growing.
Keeping your business afloat during the pandemic is the crucial thing. This is why we have discussed the way comprehensively. This ensures your business pulls through the pandemic and can make profits as well.
Despite the fact that the profits might be marginal it is worth remaining competitive in the market. You wouldn’t want to be faced out by other competitors because you did not make the necessary adjustments.