How Countries Are Helping Small Businesses Survive COVID-19

The economic downturn caused by the pandemic has taken a painful toll on small businesses. Scores of retail businesses have permanently closed in cities around the world since the Great Lockdown in the spring of 2020.

Small and medium enterprises have an out-sized impact on local economies. They account for half to two-thirds of private sector employment in the United States and the European Union, respectively, and contribute close to 40 percent of national income in emerging economies.

But small companies face greater constraints in accessing finance than larger firms, especially during economic crises. So governments have taken a variety of measures to help small businesses weather the pandemic. Without such support, the failure rate of small businesses could increase by as much as 9 percentage points.

Our chart of the week, based on the IMF’s Financial Access COVID-19 Policy Tracker, reveals the most common government support measures used by 130 countries to help cash-strapped small businesses. The data show that overall, financial assistance such as grants was the most used policy measure (adopted by 77 percent of countries), followed by public guarantees on loans (50 percent), delays in loan repayments (30 percent), tax relief (28 percent), and lower interest rates (24 percent).

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