Cash crunch remains the top challenge for startup firms and MSMEs: Survey Cash crunch remains the top challenge for startup firms and MSMEs: Survey

On January 16, 2016, the central government had launched Startup India Mission  to give new firms, particularly in the Micro, Small and Medium Enterprises (MSME) sector a boost. But five years down the line, startups and MSMEs have in a survey said that cash crunch and Goods and Services Tax (GST) remain major growth hurdles.

The Covid-19 pandemic-hit 2020 was particularly bad for the Indian economy and impacted the MSME sector very badly. Then the government came up with a Rs 3 lakh crore emergency credit line to the MSME sector but the surveyor, the LocalCircles, said that these firms didn’t avail of these benefits under the Atmanirbhar Bharat scheme as they didn’t’ have existing debt or loans on their books to qualify.

“As of today, they (start-ups and MSMEs) see funding or loans and finding growth as the top challenge going into 2021. Further 28 per cent listed raising funds or loans as top challenges, while another 25 per cent are worried about finding growth. There were also 19 per cent who said they worry about the survival of their business, and 13 per cent maintained bureaucratic inefficiencies as their top challenge in 2021,” the LocalCircles survey said.

With economic recovery starting in September 2020, the uncertainty of new coronavirus strains, as startups and MSMEs adjust to the new normal, finding growth for their business and the necessary funds and capital is seen the top challenge, the survey added.

Cash crunch remains the top challenge for startup firms and MSMEs. The survey found that “only 31 per cent of them have more than three months of cash or runway”.