Advises to SME and small business to cope up with their costs during covid 19
Faced with the changeling times where on one hand government is trying to support and bring out measures to help businesses and keep the economy going, the other hand the small entrepreneurs and businesses are wondering what steps they can take at their end to overcome this situation and mitigate their losses, to keep the business going concern. In this article, we bring to you steps that you can take and try to control your costs. So, let’s get started.
Measures related to employee costs
Take the benefit of the PF relaxation announced
For the eligible establishments, the government will pay the employee provident fund (EPF) contribution for both the share of employer and the employee (i.e 12 per cent each) for the next three months, i.e for April may & June 2020.
The eligible entities are establishments having employed up to 100 employees and about 90 per cent of which earn ₹15,000 per month.
Refer to the link below for circular reference.
You can also check the detailed video where this concept is explained in detail at the link below.
Managing salary costs
Many companies are doing layoffs and giving pay cuts to their employee so if you are in service sector or labor centric business and staff costs are one of your major P&L fixed expense then you can think of something in this direction.
Taking insurance for their employees will be added cost but employee will have the feeling of security and will deliver better output. And it will help employees and secure them from the unwarranted risks from the disease.
Measures to control other costs
Look for rental subsidies from landlords. Renegotiate the rental terms to get some benefits like more period to pay, wavier of interest.
Give your vendors advance notices of delays in payment and explore the possibility of any further or some more time to repay the debts and explore discounts.
Filings and saving yourself from penalties & other fees in government filings
Be vigilant in relaxations given by government and try to take of them and at the save not to have to serve any penalties.
Take benefit of relaxation in tax filings
Relaxation has been given in deposit of TDS whereby the interest rate has been reduced from 18% to 9 % in case of delayed payments of TDS to government treasury. If are very stressed with cash flows then this something that can be thought about as even if you go out for a loan in market it not cost you less than 9 % at least.
Keep an eye on measures announced by government
Repayment of Loan EMIs over next 3 months
If you have some outstanding loans or working capital loans or overdrafts facilities you can take benefit of upto 3 delays in repayments of installments. You can also have your working capital loans re-scheduled. For this you need to speak to your bankers and financial institution. This relaxation was announced by RBI on 28 March 2020.
SIDBI loans especially small manufacturers of specified goods
For Small businesses engaged in manufacturing of hand sanitizers, masks, gloves, headgear, bodysuits, shoe-covers, ventilators, goggles, and testing labs, SIDBI has announced for a loan of up to Rs. 50 Lacs for MSMEs they will be providing at a very low level of interest @ 5% only which is collateral free for the specified categories of business subject to certain conditions. The link to their site (उद्यमी मित्र) in the given below, you can explore the process of online application and your eligibility. Besides they also give loans to other small-scale enterprises against different conditions at below market rates interest.
SIDBI loan for corona times | https://udyamimitra.in/ |
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Since the impact of the current slowdown can be seen across 2-4 quarters, discretionary (marketing) expenses should be evaluated. It is important to first gauge if the customer is in the right frame of mind to buy your product or service. Money should be used more prudently in these times.
It takes seven to 10 years to build a strong business, and somewhere, something will go wrong along the way. Companies should leverage this opportunity to also look inwards and sharpen their tools – from fixing design issues to a host of other internal processing.