SMEs are not receiving enough support during Covid crisis argues SchuldenlabNL

As a result of the extension of the lockdown measures, many small and medium-sized businesses, to stay afloat, have to wager their own equity. They create personal debts as the threat of bankruptcy looms. At the same time, there is no central point of support to which SMEs can turn when they have financial problems, argues accountancy firm Deloitte in a report commissioned by platform SchuldenlabNL.

To tackle this problem, SchuldenlabNL, the Dutch Association of Insurers, the Dutch Banking Association, and Deloitte present a comprehensive plan to help SMEs at crucial moments. The plan is to ensure that SME entrepreneurs with (preliminary) financial problems are supported on time with professional help. One of the goals is to increase communication between independent entrepreneurs and municipalities.

SME entrepreneurs are insufficiently aware of "a large part of the alternative forms of financing," states the research report. But "when they seek help, entrepreneurs end up in a fragmented landscape of parties with conflicting interests," said Deloitte. There is no central support center where they can go with financial problems when the bank no longer offers options.

During the coronavirus crisis, "government aid is largely one-size-fits-all, and it doesn't always end up in the right place," said the Deloitte study. The many government support measures are therefore far from sufficient to prevent financial disasters among SMEs. In addition, entrepreneurs tend to sound the alarm too late, due to underestimation of the problems and shame, according to the research report.

"It is heartbreaking that some SMEs see their life's work lost," says project chair Sadik Harchaoui of SchuldenlabNL. "It is bad enough that many lose their savings. We have to prevent them from getting into extra debt, which they cannot get out of personally. "