NeoGrowth's MSME Insight Report Shows Resilience of Small and Medium Enterprises Post-Pandemic

NeoGrowth, a fintech lender, highlighted that the MSME sector has shown resilience over the past two years since the COVID-19 pandemic began. The sector has effectively utilised the digital payments ecosystem to recover. According to NeoGrowth's 'MSME Insight Report 2022', small and medium enterprises have managed to recover robustly with timely assistance.

The report is based on an in-depth analysis of over 40,000 MSMEs from 25 cities across 88 industries, covering the period from March 2020 to March 2022. It examined the challenges faced by MSMEs during the pandemic, the impact of support measures on their recovery, their shift to digital business practices, and their resilience over two years.

Arun Nayyar, NeoGrowth's whole-time director and CEO, stated that many MSMEs struggled in 2020-21 due to loan repayment burdens amid reduced consumer demand. "Early on in the pandemic, we identified that MSMEs needed extra support since this was a genuine business disruption. We realised that MSME customers were inherently honest and had the willingness to pay back," he said.

The company noted that initial lockdowns severely impacted MSME operations due to movement restrictions, cash flow management issues from decreased consumer demand, and uncertainty about business recovery. In response, NeoGrowth launched 'Sanjivni', an initiative aimed at helping MSMEs recover.

The report revealed that 46% of MSMEs across India required financial aid to mitigate pandemic impacts, with non-metro areas showing higher demand than metros. Maharashtra was notably affected during the first wave, with nearly half of MSMEs in Pune and Mumbai needing financial assistance.

Financial support for non-discretionary MSMEs was less compared to other businesses. Despite being among the first affected by the pandemic, these enterprises demonstrated resilience by adopting digital solutions for business operations, acquiring new skills, diversifying customer bases, and using digital lending for financing needs.

NeoGrowth's proactive approach involved understanding MSME sentiments at the pandemic's onset and providing necessary support. This assistance enabled many businesses to recover effectively. The report underscores how digital transformation has been pivotal in helping MSMEs adapt and thrive in challenging times.

The findings highlight how crucial timely support and digital adoption have been for MSME recovery. By embracing new technologies and diversifying their operations, these enterprises have not only survived but also positioned themselves for future growth.