The COVID-19 global pandemic has affected everyone, everywhere. But SME’s are disproportionately impacted due to their nature and the general challenges they face, such as small size, working capital constraints, lack of access to credit and often short track records. Now, concerns are being raised over the mental health outcomes and issues created by the global pandemic for SMEs and their stakeholders. 

Banks and financial institutions in particular need to take this into account when dealing with SME customers. These small businesses, that were already facing financial challenges, are now having to also deal with retrenching, closure of business and significant uncertainty about the future. 

A Need for Understanding 

Helping employees cope with their worries about the risks of COVID-19 and returning to work, along with new measures at work, psychological stress and financial pressures is a huge burden right now, especially for the heads of SME businesses. Along with this, these individuals need to deal with the stresses of the business, their own personal lives and other issues, while often receiving little to no support from the government. In this atmosphere, banks need to keep in mind that these are not simply businesses but also livelihoods with entire families often depending on them for their daily bread. While banks need to mitigate risk, it is necessary to be understanding of the present plight of SMEs, particularly in emerging and frontier markets. 

A Need for Reform

Especially in terms of taxation and compliance, there is now a global need for reform for SMEs. Overburdened by taxes and overregulation, many are struggling to keep up and many are not able to access government assistance as a result of these circumstances. It is also important, at this time, for governments and banks to collaborate to provide credit relief packages along with trainings, motivational sessions and counselling, to help protect SME’s from the present environment and ensure they maintain to the potential to shine once conditions are more favourable. 

Alternative Avenues

SMEs, particularly in emerging and frontier markets, who are engaged in international trade and facing distress or lack of access to credit at this time, should look beyond their borders for international banks and trade finance providers, such as Euro Exim Bank, who can assist them with more accessible credit, while circumventing some of the excessive regulations they may be subject to in their home jurisdictions.