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We are risking the future in the next 15 days”

We are risking the future in the next 15 days”

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by April 11, 2020 News

The SME runs out of oxygen Small companies tell EL MUNDO about their ordeal after the abrupt closure of their businesses and the uncertainty about their viability.

The SME runs out of oxygen and implores the bank

The SME runs out of oxygen and implores the bank

Beyond the latest stock market crashes and the wave of media ERTE announced this week by large companies, the coronavirus crisis has strained to the maximum and threatens to tear apart the authentic productive fabric of the country: SMEs.

The situation is unheard of for these small companies. From one day to the next, the income has volatilized while its owners have to continue facing different expenses and see their liquidity decrease. After resisting a first week of heart attack, the different cases consulted agree that their future is at stake in the next 15 days.

And in that future, banking will play a fundamental role. The Government approved last Tuesday a program of public guarantees of up to 100,000 million euros for credit institutions to breathe more oxygen into these companies with treasury lines that allow them to artificially cope with the stoppage of activity. The banks have responded affirmatively to this request and have even emerged additional credits to his charge amounting to 60,000 million euros and other measures to postpone quotas that go even beyond those approved by the Executive.

However, business organization representing 2.89 million SMEs and the self-employed warn that the royal decree law on economic measures does not clarify the process for obtaining financing and are suspicious that the financial sector will open its hand so much in a uncertainty scenario that points to an economic recession. “If the public guarantee is not 100% for SMEs and the processes are streamlined, the loans will not come. Nobody is thinking today of new investments, but rather of keeping the flame of their business alive,” explains Gerardo Cuesta, president from Cepyme. The urgency of the problem is capital as, according to data from the Bank of Spain, Spanish business companies have a balance of 92,000 million euros in loans with maturities of less than one year.

The SME runs out of oxygen and implores the bank: “We are risking the future in the next 15 days”

“This is a chain of contagions. My franchisees will not be able to pay me for the supplies I have sent them, and we will see more and more invoice returns to suppliers. With the business closed and without liquidity, the situation is critical,” explains Iván. Ledesma, CEO of the Be Beauty franchise. This chain, made up mostly of freelance companies, has launched temporary layoffs for a staff of 200, while franchisees have spent days trying to get someone at the ICO or bank branches to explain how to access aid: “Banks do not They cope with the current teleworking situation while electricity bills, rent, and even taxes will continue to come in. If there is no VAT deferral, many companies will die. ”

Cepyme and the Catalan Cecot ask the Ministry of Economy led by Nadia Calviño for more clarity and agility in measures to stop corporate destruction. Among the claims, both organizations request that the State raise public guarantees on loans directed at the most vulnerable companies to 100% or that the Administration itself even grant liquidity, returning the latest transfers for payment of taxes. The first of the requests is in line with those made by the banks themselves, which argue that there are sectors, such as tourism, that are exposed to enormous uncertainty and high probability of bankruptcy.

“We see a collaborative will on the part of the bank, although in many cases it will not be able to grant the loan if there is no relaxation of the criteria of financial supervision in the allocations that they must grant to certain loans,” explains David Garrofé, general secretary of the Catalan employers Cecot. The ECB promised on Friday afternoon that it will grant such “flexibility” in supervision. This executive warns that liquidity worries entrepreneurs a lot, but apart from that, it highlights the strong deterioration that the balance of companies will suffer due to the drop in business.

The good news is that most SMEs arrive in a healthy state of the coronavirus crisis. According to Cesgar’s annual barometer, one in three of these companies -that is to say, 1.3 million- required financing during the last year, while the rest -mostly self-employed without employees- have subsisted on their own resources generated by your activity. In the case of those that did need funds, 37% requested a commercial credit (deferment of payment to suppliers), 28% a line of credit and 20% a loan, among other options such as factoring or confirming. Its debt ratio ranged from 30% of its assets, according to the Central Balance Sheet of the Bank of Spain.

The Madrid International Yoga School is one of those companies that until now boasted of financing its activity with its own income, but the coronavirus crisis has turned everything upside down. Its manager, Nadir Criado, has had to implement an ERTE for most of the workforce and sought alternative income formulas such as online classes. The horizon is worrisome for society and the chain of 40 freelancers with whom it works among providers, teachers and other services: “The savings will allow us to stay alive for a month but we have fixed costs, such as rent, which exceed 10,000 euros per month. From there we would enter losses, “he explains.

Many SMEs take advantage of commercial financing themselves to reduce their costs. In other words, they charge 25 days and pay 33. Those eight days of margin have been key to surviving this week, but they are coming to an end. “We this next week will have to run an ERTE for a staff of 20 people. We are very concerned about the treasury, the destruction this week has been enormous,” explains Antonio Magraner, owner of a small business that has television licenses. and a restaurant used oil treatment plant in Alicante. Both businesses have plummeted with the crisis, in one case due to the loss of 90% of advertising and in another because all the restaurants and hotels that supply the oil are closed. “What the Government has approved has small print, the banks or the ICO are going to demand that the group continue billing to grant that financing. If you do not sell, nobody will give you anything,” he warns.

Eva Tarancón, speech therapist and owner of the Bla Clinic in Granada fully agrees with this diagnosis. His business was doing very well until the state of alarm forced him to lower the blinds. “We have gone from 100 to zero in one day. We will have to start again,” he says. Those that survive, and this will depend on maintaining their liquidity level. “Companies need financing to pay fixed expenses. Deferring a debt for a month or two is not the solution, because the problem accumulates,” he insists. Does the guarantee plan announced by the government reassure you? “For now there is a lot of ignorance, the banks are collapsed.”

For their part, the entities are working these days to manage the teleworking of their staff and respond to the millions of customers who call their physical or digital window. Sabadell, for example, has deployed a team of 3,400 agents aimed solely at monitoring and reassuring its clients. The entities have been demanding for days from Minister Nadia Calviño that public guarantees cover up to 80% of credit lines. Joan Carles Martín, owner of a congress assembly company in Catalonia, received the offer of a credit policy a few days ago from this entity. In his case, the situation is more serious since the stoppage of activity began after the suspension of the Mobile World Congress last February. “The role of banks is going to be fundamental. In our case, we are even noticing the delay in the payment of invoices from the public administrations with which we work. We are on the edge and no company is prepared today to face a crisis like that of 2008 “, he concludes.

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