For the past year, governments across the globe have provided a variety of support measures to small and medium enterprises (SMEs) to help them survive the devastating economic impacts of the COVID-19 pandemic. Some of the most widespread measures adopted to target these vulnerabilities included income and corporate tax deferments, wage subsidies and direct lending to SMEs.
One year into the pandemic, SMEs remain in a precarious situation, especially young firms and start-ups, the self-employed, and women-led or minority-owned businesses. Furthermore, emergency liquidity support is not sustainable over the longer term and may have potential negative effects (such as SME over-indebtedness).
Governments need to ensure that support reaches business owners equitably going forward. Female-led SMEs, for example, were 7% more likely to close than their male counterparts’ enterprises.
As governments map out exit strategies, new support packages can help shift to more structural policies and provide new forms of funding that protect SMEs from over-indebtedness such as grants, convertible loans and loans eligible for forgiveness. Clear metrics will also help assess the real impact of policy performance on SMEs.
Read the OECD Policy Responses to Coronavirus (COVID-19) One year of SME and entrepreneurship policy responses to COVID-19: Lessons learned to “build back better”.