These SMBs prefer schemes that offer immediate cash benefit rather than those aimed at long-term recovery or growth, the survey found. While 68% of SMBs were aware of at least one scheme under the initiative, only 32% were considering availing of at least one of the benefits. One reason for the lower uptake of credit guarantee and loan schemes has been their ability to manage working capital during the pandemic, Kantar said.
According to the firm, while 51% of SMBs said they had less than two months of working capital at the start of April, by the third week of June that had dropped to 30%, leading to a drop in requirement of the government loan scheme for MSMEs.
“Businesses have figured out how to manage their working capital,” said Biswapriya Bhattacharjee, executive V-P of the insights division at Kantar. “The requirement of loans at market interest rates is something that’s not really appealing for SMBs.”
While uptake for long-term measures has been low, a larger number of SMBs are looking to benefit from the extension in deadlines for filing income tax and GST, which puts money in their hands immediately, with 16% and 12% businesses, respectively, saying they would avail of these benefits.
Another non-core part of the package was loans at lower interest rates for MSMEs, and according to the survey, 12% of businesses said they would avail of this scheme.
Only 6% businesses said they would avail benefits under the government’s Rs 20,000 crore debt provision for two lakh stressed MSMEs. About 4% said they will take loans where the government will offer 100% credit guarantee cover, while only 3% found the reduction of EPF contribution for organisations — from 12% to 10% — to be useful.
Given the scale of the impact the lockdown has had on Indian businesses, Bhattacharjee said the “expectation would have been that a lot more businesses should have been aware of this (Atmanirbhar Bharat initiative) because it’s for their own benefit.”
Amit Maheshwari, Managing Partner at chartered accountancy firm Ashok Maheshwary & Associates, said that businesses were not inclined to avail further loans as there is still a lack of visibility around when businesses could recover. Instead, they have been looking at ways to cut costs.
“Businesses are looking to bring down debt at this time, not increase it by taking more loans. They’re more inclined to conserve cash by cutting costs – by reducing headcount, cutting salaries, giving up their leases. That’s also why there are more takers for deferring payment of income tax and GST under the government schemes, which is helpful immediately,” added Maheshwari.
Kantar also found that a higher share of SMBs in towns outside the top seven metros were availing the government incentives, especially loans.
Bhattacharjee said this was largely due to businesses in the top metros being able to cut costs far better than SMBs outside these cities, due to reverse migration and better adoption of digital technologies to run their businesses.