Non-Metros Started Witnessing Pre-Covid Era like MSME Credit Demands; Says NeoGrowth
Non-metros have reached the same level of MSME credit demand as it was in pre covid era in March 2022 while metros have almost reached pre-covid leaves, according to a study performed by digital small business lender NeoGrowth.
If divided into sectors and segments, non-discretionary demand-oriented businesses like petrol pumps, infrastructure, and auto had recovered faster than consumer-facing and discretionary demand-oriented businesses, the study assessed over 40,000 Micro Small and Medium Enterprises from 25 cities for the period March 2020 to March 2022 noted.
The study also highlighted the comeback of MSMEs during the post-Covid period. In the aftermath of the second wave, MSMEs were well prepared and coped with problems coming adjusting to the new business environment as only 30 percent of them had required support compared to the first wave in 2020.
“Many MSMEs were struggling in 2020-21 due to the burden of loan repayments because of the cessation of demand from consumers…The MSME ecosystem in India is a ‘Survival to Revival’ saga. The vital lessons learned from the pandemic have transformed the way businesses operate and fast-tracked their move to digital. The credit demand from MSMEs is back to a healthy level,” said Arun Nayyar, Whole Time Director and Chief Executive Officer, NeoGrowth
According to the study, while MSMEs across different segments experienced the consequences of the pandemic, only 46 per cent of them needed financial support to deal with higher demand from non-metros than metros. Moreover, financial support availed by non-discretionary MSMEs was lesser in comparison to other types of business.
In 2020, MSMEs were impacted during the lockdown due to restrictions on movement, the inability to manage cash flows due to reduced consumer demand, and uncertainty around business recovery post resumptions. To support MSMEs in their recovery, NeoGrowth launched its Sanjivni initiative to extend financial and non-financial assistance through customized solutions for all types of customers irrespective of the severity of the impact.