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77% of SMEs would stop for up to two months: ASEM

March 26, 2020

Entrepreneurs and MSMEs are the main employer in the country and an important engine for the economy.

5 min read

The Association of Entrepreneurs of Mexico (ASEM) developed a survey with the research company Nauta of 1,211 Mexican MSMEs belonging to various sectors and found that 77% could stop operating in less than two months due to the COVID-19 pandemic.

Other results found by the survey:

  • 87% estimate that they will lose sales, customers and approval of new jobs.
  • 31% will have difficulty paying their loans or credits.
  • 40% will have a hard time paying taxes.
  • 25% will be forced to fire staff.

The sector that foresees to have the greatest impact in the short term is gastronomy, since 89% of the companies surveyed in this sector could stop operating in the next two months.

What could be done?

Entrepreneurs and MSMEs are the main employer in the country and an important engine for the economy. The effects of COVID-19 sharpen challenges that we constantly face, such as the lack of liquidity. We are committed to seeking all possible mechanisms to maintain our operation, always seeking to preserve the workforce and contracts with suppliers. To do this, and based on the results of the survey, ASEM proposes the following actions at the Executive, Legislative and Private Initiative levels.

Proposals for the Executive:

  • Streamline pending payments to suppliers at the three levels of government. The Ministry of Finance and Public Credit (SHCP) announced a commitment in this regard. We request that the action plan, available budget, and data be verified to verify compliance. We request the same at the state and municipal levels.
  • Anticipate payments for new projects for at least 3 months, so as not to stop consumption.
  • Generate credit lines with zero interest for MSMEs working capital through NAFINSA and activate financing through state funds.
  • Streamline VAT refund.
  • Postpone, for at least three months and defer, as long as possible (without surcharges), the payment of provisional ISR taxes, payroll tax and worker-employer contributions (corresponding to the pension and Infonavit, without suspending the part corresponding to Social Security).
  • Suspend, for at least three months, the payment of basic services such as water and electricity, and grant subsidies for leasing. Especially for sectors of greater affectation.

Proposals for the Legislative:

  • Streamline legislative work to make # LeyPago30Días a reality. We are faced with liquidity every month. This juncture only sharpened her. If we have the payment of our suppliers (government and companies) on time and in fair terms, we will be able to better face this contingency. This implies not only establishing a payment deadline, but also an agile and cost-free dispute resolution system to guarantee its effectiveness. We have already presented a first draft to the Senate's Economic Commission through its Technical Secretariat.
  • Approve changes in the Federal Budget and Fiscal Responsibility Law and the Federal Public Debt Law to have an emergency fund that mitigates the impact on the economy, productivity, consumption and employment. This fund should be sufficient to attend to the different sizes of companies and consider the possibility of granting subsidies for the cases of greatest affectation.

Proposals for the Private Initiative (mainly large companies belonging to sectors that have not been seriously affected and financial institutions):

  • Streamline pending payments to suppliers and anticipate payments for new projects for a period of at least 3 months, so as not to stop consumption.
  • Join the self-regulation measures of payment to suppliers in 30 days proposed by ASEM and the Council of Competitiveness of Mexico (CCMX). This will help both the contingency and the subsequent economic recovery.
  • Freeze payment of SME loans by financial institutions for at least 3 months from April, and defer payment to the longest possible term (without interest charges).
  • Generate financial credit products with special terms and conditions for the most affected cases.
  • In cases that warrant it, give the possibility of restructuring SME credit as long as possible.
  • To the extent of its possibilities, freeze the lease collection, starting in April, and defer its payment to the longest possible term (without interest collection). Especially for cases of greater affectation.
  • Postpone payment of basic services such as telephone, Internet and gas for three months.