Small businesses offering services related to health and wellbeing, gastronomy, and art and entertainment have been the most affected by the coronavirus pandemic in Argentina to date, and 27 percent of those affected by the crisis have closed permanently, a new study has revealed.
The data, compiled by the Association of Argentine Entrepreneurs (ASEA, in its Spanish acronym), seeks the quantify the impact of the Covid-19 pandemic on small businesses, more than one year after the start of the virus crisis in Argentina.
"More than a quarter of the businesses negatively affected had to permanently close. Among the main reasons are government regulation (34 percent), lack of clients (34 percent), financial challenges (11 percent) and those related to rent payments of premises (9 percent),” said the report.
Argentina suffered a dramatic fall in GDP of 9.9 percent last year as Covid-19 swept across the country. The government ordered a strict quarantine in mid-March, which lasted several months, complicating life for small businesses.
A total of 292 small firms took part in the ASEA survey, the majority from Buenos Aires Province (35 percent of respondents), followed by Buenos Aires City (28 percent) and the provinces of Córdoba (9 percent), Santa Fe (8 percent) and Mendoza (3.4 percent).
The investigation sought to reveal not only to what extent businesses were affected by the pandemic, but also what needs and challenges the surviving businesses are faced with.
In terms of state aid, more than 80 percent of affected businesses said they had not received any government support. Most of these businesses (65 percent) knew about the available measures but did not apply because they did not meet eligibility requirements (70 percent). A further 16 percent did not apply because they did not know how to.
Looking at short-term challenges, the relatively small sample showed that lack of demand or clients was the main concern for businesses that remain in operation (56 percent). Cash flow (39 percent) was also a worry, followed by the possible government regulations (30 percent) — such as new measures related to lockdown or a reduction in capacity for commercial establishments.
Almost a third (28 percent) of the businesses that continue to operate do not know how long they would survive in the face of a second mandatory quarantine.
ASEA Executive Director Bernardo Brugnoli said that the effects of the pandemic show that small businesses need to be treated differently when it comes to taxation.
"Small businesses do not have the same backing as larger companies: 65 percent reported that they need supporting policies related to taxes. Progressiveness in tax is essential so that they do not die out in the [Covid-19] second wave," he stressed.
He added that it is “fundamental to assist the sectors affected by the new restrictions" in zones where there is greater epidemiological risk.
ASEA is a non-profit organisation, formed in 2014 by and for entrepreneurs. It represents more than 38,000 entrepreneurs across various industries and provinces.