The COVID-19 Pandemic has been by far the biggest global humanitarian disaster than any other natural or man-made causes. When it comes to the spread of destruction, countries and populations all over the world have been affected.
With fears of subsequent waves lurking on the horizon, governments all over the world are scampering for resources. Lockdowns, physical distancing norms and falling demands have made it particularly tough for small and medium businesses.
As compared to big business, SMEs and MSMEs have been forced to dig deep into their savings, lay off employees, start restricted operations and suffer a decline in customer base.
In this resource article, we look at some ways how these businesses should approach bankruptcy during the pandemic.
What the Government is doing to help SMEs and MSMEs?
According to reports and data coming in from the IMF, unemployment rates are expected to rise by as much as 10% in 2020 and 2021. Insolvency or businesses filing for bankruptcy are expected to rise as much as 16% in 2021.
At a time when the economy is suffering, the government needs to step up to help businesses by infusing stimulus into the economy. According to leading financial and legal experts, the following are some areas that the government needs to look at-
· Giving SMEs and MSMEs some form of a Loan Moratorium that can help in delaying interest payments on their loans.
· Providing easy access to Business Loans and Stimulus that are accompanied with less paperwork and scrutiny.
· Extension of Unemployment Benefits of employees of businesses that have shut down, closed or have deferred salaries immediately.
· Assistance of healthcare, food, and other essential commodities and resources during the pandemic.
· Benefits and relief in terms of power supply, license, registrations and permits renewals at least till things get better.
All these things cumulatively can go a long way in ensuring immediate relief to businesses struggling because of the pandemic. To know more about how businesses can seek government relief, view website.
Advantages of Filing for Bankruptcy during the Pandemic
When it comes to filing for bankruptcy, the first thing that comes to our mind is failure. However, that is not the case. According to lawyers that specialise in bankruptcy, this is a process that comes with its own share of benefits.
Firstly, for example, bankruptcy can allow you to arrest a downward spiral for your business and exit is an honourable manner. It can also ensure that your personal assets are protected even when your business suffers due to a natural disaster like the COVID-19 Pandemic.
Secondly, a bankruptcy is also going to help you assess what went wrong with the old business and help you with a proper learning curve. This ensures that you start your new business from a clean slate with the right kind of guidance and direction.
Finally, filing for bankruptcy can attract government attention. The officials can then step in to protect your business and the employees by giving several additional reliefs. Working with the best bankruptcy lawyers can ensure that all the above advantages can be taken care of.
The Final Word
While things are improving as vaccinations have started rolling out, for SMEs and MSMEs there is still a long way to go. Most experts predict that the economy will take till the end of 2023 to come back to normal. This means that these businesses need to keep preparing for tough situations in the immediate future.
If you wish to know more about bankruptcy laws or want to address your questions to our experts, you can do so. All you need to do is mention your questions in the comments section below and we will get back to you at the earliest.