Question

Why are small businesses important for most economies? Looking at COVID-19 do you believe Lockdown and Small businesses what could we have done differently?

what it takes to have entrepreneurial spirit to start a small business? What would you like to do? What are the hurdles?

Answer 1

small businesses are important for economy because small businesses not only generate large scale employment but also they go along way in checking rural urban migration by providing people living in isolated areas with a sustainable source of employment.small businesses promote inclusive growth by providing employment opportunities in rural areas especially to people belonging to weaker section of the society.small businesses reduce the gap between rich and poor as they are agents of inclusive growth.small businesses help in reducing greenhouse gases emission as they are generally closer to markets leading to reduce carbon footprints.

Small businesses facing problem due to covid-19 and lockdown

. Small business is declining their revenues and capacity utilisation in the lead up to covid-19 crisis.

. Unavailability of cash :- the total lockdown has raised an issue of the existence of small businesses primarily due to unavailability of cash which subsequently will result in the job losses.

. Lack of labour availability:- the return of migrant labourers will create an issue of lack of labour availability.

. Loan against collateral:- loans to small businesses are mostly given against property but in time of covid-19 crisis property value fall and that inhabits the extension of new loan.

. Steps taken:- to is the firm's financial distress during this covid-19 period and lock down the federal bank has announced several measures such as a moratorium on turn loans and easier working capital financing. Some public sector banks have also open up emergency credit line for businesses.

Entrepreneurial spirit to start a small businesses government can provide tax relief, give swifter elephants and provide liquidity to rural sector.

. Credit guarantee by the government can help as it assures the bank that it loan will be repaid by the government in case of small businesses. If such default happen credit guarantees are shown as a departmental expenses in the budget.