why government aid is not enough

Mandatory social isolation suffocates businesses on the street. Tension with suppliers, bounced checks and salaries at risk, part of the scenario

Due to a logical matter of privacy, the identity of the entrepreneur is not revealed by iProfessional, but the story is one hundred percent true. This is S.I., owner of one of the most emblematic restaurants in the City of Buenos Aires.

Like the others in the country, the local S.I. it is closed to the public. The room – which received 120 diners between Monday and Wednesday and between 170 and 200 from Thursday to Sunday – is now empty. From the door it is impressive to see the chairs on the tables that -also- are covered with the typical white tablecloths.

The motorcyclists of Glovo to take orders. But nothing is the same. Nor for the owner. Since the quarantine began, each night it receives between 28 and 35 requests for the application. Although the situation is volatile. Last Thursday, for example, he sold just a dozen dinners.

YES. take accounts and share them with iProfessional. Since the store closed, on-demand sales cover only between 9% and 11% of their usual turnover. It is not even enough to pay the salaries.

Salaries for cooks, waiters, counter staff and dishwashers are usually covered at 35% of normal billing, says the restaurant owner. In total there are 19 people, who earn an average salary of 35,000 pesos in pocket.

SO. he looks distressed. It is clear that with what you are selling now it is not enough to pay wages or other bills that you must pay each beginning of the month: from the rental of the premises to the consumption of electricity and gas, in addition to taxes (national and City) ).

“On top of that, Glovo turns the money over to me in the coming weeks. And he keeps 20% plus VAT on the sale as commission,” he says.

To top it off, most of their suppliers only admit to selling for cash: basically, their purchases of meat, fish and vegetables.

The finishing touch to the dramatic situation is put by banks. Like several of the checks issued by S.I. They came back bounced for lack of funds, from the two entities with which he works they call him several times a week to see if he can cover the “red”.

“They call me to tell me that they can cover up to a maximum of $ 30,000 for 24 hours,” he says. “Where am I going to get the cash from?” He asks.

He just calmed down when the central bank removed the norm that avoids disqualifications and fines for unpaid checks. One less problem. But that didn’t stop the moodiness when, last Wednesday, he was unable to deposit cash at the branch.

“I left the business at 10:30 and it was 14:30 and I had not succeeded. It is supposed that for large sums there are specially affected personnel, but in my case it was all delays and nerves,” he says.

To pay the salaries, the businessman asked at the three banks where he has accounts. “I hesitated a lot. Who tells me that the quarantine ends after the Easter week and I go back to work? What if, at best, they let me open with restrictions and only allow me to cover half the restaurant? How do I pay my wages next month? And how do I pay the installments of this debt? “

For now, they are questions that have no answers. Because nobody has them.

The credits proposed by the Government for SMEs to pay March wages have an interest rate of 24% nominal annual. Some thirty chambers that include small and medium businessmen complained to Matías Kulfas, Minister of Productive Development, that the cost of these loans be at zero percent. As a way to give explicit support to businesses and factories that are forced to close the shutters in quarantine.

Kulfas was excited about the idea, but the banks rejected it.. The minister would even have written a decree of necessity and urgency to get out fast with the initiative. But the pressure from the banks was relentless. The financiers accepted, at most, a nominal rate of 24 percent.

And the Repro?

Different businessmen consulted by iProfessional comment that Repro (Productive Recovery Program) are not yet available, despite the fact that the Government promised that it would be accessed through an express procedure.

Admits it too Marcelo Fernández, Pyme leader-holder of the General Economic Confederation (CGERA) -. “How do we go about filing the papers if we’re not opening the factory? Where did you get the employee payroll, for example?” He asks.

“Entrepreneurs do not know about procedures; we know about work and production. We do not know how to prepare paperwork, and today that is impossible. But wages have to be paid,” says the owner of a textile in anguish.

The impact of quarantine, in the first person

The experience of a plastics manufacturer It completes the picture on the effectiveness and the little convenience of the special lines to pay the wages.

The industrial SME states, in dialogue with iProfesional: “I have just been repaid the loan of $ 630,000 at 24% per year in 12 installments. According to the bank, the plan three months grace does not exist. They did not give it to me. In total, I was credited $ 609,000. Why less? The bank charged 2% of commission ($ 12,600) plus VAT. He Stamp Tax, which at first they said he did not carry, finally charged him. Also “Perception”. In total, the cost was almost $ 21,000, where I will only recover VAT. “

And he adds: “If I add all these expenses to 24% per year, the Total Financial Cost (CFT) must be at least between two and three additional points. The only incentive is that this rate will surely end up being negative with respect to the inflation coming. But, let me be clear, in the crisis, the only ones that continue doing business are the banks. “

Another case, this time that of a small company that manufactures brakes, with 22 employees. This is how the experience Agustín, one of the partners, who wanted to draw the special line to working capital:

“On Monday at half past ten in the morning, my bank account officer offered me $ 750,000 at 24% per year. He promised me that it was something express. Until now (Friday afternoon) it could not be settled because how easy it was it was complicated with a lot of forms that appeared, “he laments.

And he details: “Yesterday (Thursday) theoretically everything was and today they liquidated it. The bank official called me a while ago and told me that, at most, they could give me $ 620,000. Less than what I need. And that there are no three months grace to pay back the loan. I got tired. I told him that I was not going to re-sign all the papers; in this context it is an additional problem. So next Monday I decide. “

What to do? That is the question

S.I, the owner of the restaurant, has already made the decision. He does not want to be morally judged, but he resolved that he will leave some accounts unpaid. “Later it will be seen. I am a historical compliance,” he says, with papers in hand.

This month you will not pay VAT or Gross income, neither him ABL, these last two of the City. You will pay the electricity and gas bills exclusively. And this week you will sit down to negotiate the monthly rental fee. He is going to propose paying half and the rest by the time the situation returns to normal.

It will also meet the $ 35,000 monthly fee of the prepaid medicine. Of course, “after so many years it will be the first time that I delay paying the college fee. It is not enough for everything. “

First-person stories of one of the most complicated economic and social moments in Argentina since the 2002 crisis.

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