How the Pandemic Affected Business – The health crisis has affected many small businesses that have had to stop, change course or completely cease their activities due to the measures adopted to mitigate the spread of COVID-19. However, some have been more affected than others within this segment due to their degree of vulnerability.

This is the case of Peruvian microentrepreneurs living in poverty or at risk of falling into it. They still face gaps in financial inclusion and access to the necessary tools to boost their businesses. To meet the crisis, thousands of women entrepreneurs in the agricultural and urban sectors have been forced to take certain measures to maintain their businesses’ continuity or subsistence.

To get a more concrete idea of ​​the impact, Financiera Confianza, an entity of the BBVA Microfinance Foundation in Peru, surveyed its clients of the product Word of Women. It showed that only 6 out of 10 microentrepreneurs were able to have their businesses running in October 2020, although the country was already in phase 4 of economic reactivation by that date. In addition, during the quarantine period, mobility restrictions had a significant impact, being more reflected in rural settings. This generated that 46% have lower sales or no sales.

Actions against COVID – Pandemic Affected Business

Actions against COVID - Pandemic Affected Business

Faced with this scenario and to maintain income, 72% of the microentrepreneurs decided to diversify their business (48% changed and 24% added a company) since they live from day to day, and any slight alteration can change the survival strategy. Also, some volatility is observed since 10% of them, seeing no other way out, decided to return to being dependent. The recovery actions revolved around searching for a new job, especially in rural areas, and resorting to savings.

On the other hand, the research highlights that if they need capital, they prefer to opt for loans to family members and not from a financial institution, which demonstrates the financial inclusion gap mentioned above. This situation represents an opportunity for entities to publicize their financial products and help microentrepreneurs formalise and enjoy banking benefits.


Finally, it is observed that digitalisation is known, but little use is made of it. Specifically, 9 out of 10 vulnerable micro-entrepreneurs know or understand digital tools due to their average age, but the great challenge is their proper use for their businesses.

Financiera Confianza has set an objective in this area and provides digital training to help the current ‘digitalization’ be used for entrepreneurial purposes. For example, I am using WhatsApp to contact customers or manage orders.

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Support from Financial Entities – Pandemic Affected Business

There is a need in the country to contribute directly to economic reactivation and the reduction of inequity, and it cannot achieve without SMEs and women entrepreneurs. That is why it is essential to promote or develop initiatives to encourage or provide these micro-entrepreneurs with tools, products or services that allow them to turn the crisis into an opportunity.

The role that microfinance institutions can play in these segments is essential. For example, Financiera Confianza recently sign an agreement with Centrum PUCP so that 600 women micro-entrepreneurs have free and virtual training to help them reactivate their businesses. With this initiative, they will expand their knowledge and strengthen their skills in formalization, negotiation, digital marketing, electronic commerce, Pandemic Affected Business impact on the environment, financial management, and others.

Business Continuity – Pandemic Affected Business

Business Continuity

The business continuity plans that companies have today are necessarily preparing to manage variables as dynamic and changing as COVID-19.

  • Determine the potential impact that COVID-19 may have on the business.
  • Develop action plans for each possible scenario in which the company may involve.
  • Manage a communication plan with the different interest groups.
  • Anticipate how priorities will address, including those resulting from new government measures, to minimize the risk of business interruption.
  • Assistance in defining exception procedures to operate during the contingency, observing the other existing risks (cyber, fraud, compliance, legal, etc.).
  • Define financial administration policy, cash management and working capital.
  • Develop business projections in response to different possible scenarios.
  • Evaluate alternative sources of financing.
  • Define the business strategy to follow once this circumstance has been overcome.

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How to Reduce the Impact of the Pandemic on my Business?

How to Reduce the Impact of the Pandemic on my Business_

To protect businesses and minimize the impact of COVID-19, Jack Burga, head of financial inclusion at CARE Peru. If advises that the first thing to do is seek to refinance debts. For this, you have to look at three main aspects:

  • The effective interest rate of the refinancing.
  • The term in which the refinancing will carry out.

The monthly fee to pay should not be more than 40% of the actual utility of the company. This factor is essential because at least. If another financing will need to cover the lost capital. how the pandemic affected business. The optimal thing is that this instalment pay with another 40% of the utility. Thus, finally, you can have at least 20% to replace the lost capital.

In addition, it is vital to adapt to new market trends in this new context, and how the pandemic affected business. which now requires a more significant presence. In social networks and the incorporation of electronic commerce.

For companies just beginning to incorporate technology into their business models, how the pandemic affects business. It recommends that they seek support to create a Facebook page and manage communication through WhatsApp. They should also start safely, offering bagged products and collecting on delivery.

Finally, they can join the Ministry of Production programs to reach more people. For example, in the case of wineries, there is the “Your company” program. Which has a page and an application that allow products to display and the location of the business to indicate.

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