According to data collected by the Peoples Action Front (PAF), 62 of these businesses have closed down and 100 were on the verge of collapse or facing bankruptcy, amidst financial difficulties, high interest rates, the need of collateral, and other restrictions on bank and finance company loans.
The appeals of the affected SME sector made to government authorities for relief from their financial burden were unheeded, Chairman of the SME Committee of PAF, Sanjay Perera told the Business Times.
SMEs have collapsed because they have mortgaged their prime assets as collateral to banks to obtain loans and cannot pay back these loans as a result of increasing losses, he pointed out.
A record number of small businesses faced downsizing or closure throughout 2017, as sluggish demand and rising operating costs battered the SME sector, he said.
At least 25 per cent of small businesses are now expecting to scale down or stop trading, with retailers among the badly affected, he said adding that some retail shop owners manage the business on their own without employing a single person due to economic difficulties.
At the Viharamahadevi Park in Colombo, the PAF recently launched a campaign of collecting 100,000 signatures from the people for a petition to be presented to the President, the Prime Minister, Finance Minister and the Minister of Industry and Commerce urging them to find some redress for the affected SMEs, by making them eligible for the Enterprise Sri Lanka Loan scheme.
General Secretary of the PAF Suresh Karunathilake noted that these loans are being given to graduates to start businesses and other existing entrepreneurs but not for failed SMEs.
The Government expects to disburse Rs. 60 billion through state and private banks to would-be entrepreneurs. Another Rs. 5.25 billion has been set aside by the Treasury to reimburse the interest subsidy to the banks