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Omnicredit Study: Half of the small local businesses reported drops in the collections over the first five months of the year
Half of the small domestic businesses reported drops in the collection in the first five months of the year, while a quarter (26%) of the owners of such businesses stated that during this interval their collection increased, according to a study made by Omnicredit, the first platform fintech 100% online dedicated to the support of the small businesses in Romania.
‘Small businesses in Romania had no stable financial situation. Vulnerabilities of these businesses were ,more obvious during the period of restrictions imposed by the pandemics. Especially as regards the financial capacity to resist shocks such as the loss of clients, the slowing down of the economic activity or delayed collections’ the study shows.
The study made on the basis of clients of Omnicredit representing approximately 2,500 entrepreneurs owners of small and medium businesses, during January – May 2020, showed the the weak capitalization of the sector represented by SMEs, companies which represent over 99% of the total of those recorded in our country.
Similarly, the results of the survey showed that 54% of the entrepreneurs interviewed stated that at present their business works with their own financial resources. Practically, these businesses are kept at surviving line from the personal financial support of the owners themselves.
The results of the study showed that only 7% of the business are financed due to solutions type of factoring or scont, although they do not represent a debt of the company, but a way of collecting bills on time, thus avoiding the risk of delaying the payments to the suppliers.
According to the quoted study, pandemics had a considerable impact on the small businesses in Romania: over 83% of the interviewees states that during this period was necessary a supplement of the business capital.
Even so, the study Omnicredit showed some surprises. The first is optimism (moderate) of the interviewed entrepreneurs. Only 52% of the business people who answered the survey anticipate that they will have a drop of the demand for products or services. Not less than two thirds of the interviewees consider for this year the extension or development of the business, while 17% consider the resumption and continuation of the activity at the level before the pandemics.
In exchange, 53% of the entrepreneurs appreciate that their domain of activity changed the dynamics completely following the impact of the pandemics, which could indicate the fact that we assist to a reorientation of the business to the business models which are more flexible. Due to the fact that the majority of business people activate in the domain of commerce and services, probably the entrepreneurs consider the transition to online operations. Moreover, the majority of the business owners say that the biggest issue they face is the lack of access to financing (85%) followed by bureaucracy and the rigid conditions imposed by banks (83%).
As businesses reject bureaucracy and risk, it is not surprising the preference of the small entrepreneurs for micro-loan solutions when they were asked about the financing solutions they have in mind for the future
Omnicredit (omnicredit.ro) is the first fintech platform for micro-financing in Romania which offers factoring products, sconting and micro-loans rapidly and with a minimum of documents.