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Covid 19 affects entrepreneur businesses; closed a million SMEs

INEGI reported that one million 10 thousand 857 entrepreneur businesses did not overcome the crisis.

In 2019, there were 4.9 million micro, small and medium enterprises.

In 2020, only 3.85 million survived who ask for more support from the government.

Entrepreneurs’ businesses have been among the most affected during the Covid 19 pandemic.
According to a report by Inegi, of the 4.9 million micro, small and medium-sized companies that existed last year, only 3.85 million survived to 2020, that is, the equivalent of 20.81% lowered the curtain.
The companies indicated that they require more fiscal support and deferral of payments to credits or services to be able to face the difficult outlook caused by the effects of the coronavirus.
The study on Business Demography (EDN) 2020 published by the National Institute of Statistics and Geography indicates that one million 10 thousand 857 establishments closed their doors permanently.
“In other words, the period of the pandemic coincides with an increase in the mortality of the establishments, we cannot affirm the causality, but we can definitely say that the pandemic has a factor in all this,” said Julio Santaella, president of the Inegi .
By economic activity, the highest proportion of definitive closings was registered in non-financial private service establishments, with 24.92%; commerce, with 18.98% and manufacturing, with 15%.

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Almost 3 million people worked in these micro, small and medium enterprises.
On the other hand, in the businesses of surviving entrepreneurs they had a decrease of 1.15 million people.
That is, a total of 4.12 million jobs were lost, with the closure of one million 10 thousand 857 businesses.
On the contrary, the Inegi study shows that 17 months after the census survey ended, 619 thousand 443 new companies emerged, in which 1.23 million jobs were generated.

Around 1.87 million companies in the country, 86.6% of the total, indicated that they had been affected by the pandemic, according to figures from the ECOVID-IE survey.
79.2% of the total reported a decrease in income; 51.2% a low demand and 22.8% suffered from the shortage of inputs or products.
The main result of the survey is that companies had a decrease in income due to the closure of non-essential activities.
Although the companies closed their operations, there are also the births of new production units that may be from other activities, so they may be adjusting to the new normal of economic activity.
“The disappearance of MSMEs implied the loss of jobs and the exit was to generate small micro-businesses to obtain their own income, this shows the problems that exist in terms of employment and investment,” says José Luis de la Cruz, director of the Institute for Industrial Development and Economic Growth (IDIC).
This situation will structurally affect the economic activity of Mexico and it will be difficult for it to be possible to think about a rapid recovery of the economy, as it will be at least until 2022 when this occurs.
According to the Survey on the Impact Generated by Covid 19 on Companies (ECOVID-IE), the proportion of companies that received government support was 5.9%, while the remaining 94.1% did not receive any type of help.
The survey shows that companies consider that the support policy most required to face the pandemic is that related to fiscal support, with 61.3% of responses.
40.6% indicated that a deferment of payments to credits and services is required, 34.4% mentioned the transfer of cash and 30.3%
said new credits are needed.
The results highlight that 37.6% of entrepreneurs’ businesses foresee a delay in the payment of their debts, and this proportion is higher in micro-enterprises, with 38%, while in large companies it is 19.3%.