Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697752319721.pdf (Georgia)
Financial Literacy Study of MSMEs Report of Quantitative Research August 2021 Research Design Research Period – 26.06.2021 – 18.07.2021 Research Area - Georgia Research Method – Quantitative Research Research Technique – CATI; F2F Sample Size– 1002 completed interviews Target Segment – Business owners / Individual entrepreneurs Survey instrument was developed by OECD/INFE to measure the financial literacy of MSMEs.
The study is organized by the National Bank of Georgia and the Financial Education Portal - Finedu with the financial support of EFSE DF; 2 Main Findings Main Findings (1) Financial products Within the scopes of the study, 1002 micro, small and medium-size business owners have been inquired who are involved in financial decisions.
As the study reveals, awareness of certain financial products is quite high, leading positions in terms of awareness are taken by financial products such as - Property insurance (94%), Micro-credit (90%), Loan from micro-finance organization (90%), Business loan from bank (90%).
Awareness of financial products in general is high among the businesses in Tbilisi compared rather than one which cooperates in regions, only awareness of Life Insurance and a loan from loan provider is higher in regions than in Tbilisi.
The following financial products have quite low awareness in Tbilisi as well as in regions: Angel investment (19%), Derivatives (16%) Venture capital (14%), Initial coin offering (13%), Factoring (12%), particularly low awareness was revealed in terms of - Crowdfunding/P2P (7%) Mezzanine finance (4%).

Among them who have heard of the listed products, only a very small portion (1%-5%) reported on having used the said products for their business needs.
It is also worth mentioning that none of the business representatives who have heard of the product Factoring have used the said product over the past 24 months.

Top most frequently used products are Trade credit (33%) and Business loan from bank (31%).
There are slight differences in Tbilisi and regional perspective in terms of using financial products, for example, frequency of using Business loan from a bank is 11% higher in regions (36%), in addition, consumption rate of Property Insurance is 10% higher in Tbilisi compared to regions (10%).

When speaking about financial products, it is important to note that according to ¼ of inquired companies, their company does not have current bank account or saving account.
About half of them who has bank account for their business, strictly separates accounts for household and for their business, indicated financial behavior it more common in case of companies that are functioning in Tbilisi ( 53%) than in case of companies in regions (44%) 28% of them who has bank account uses same account for business and household finances and 23% of them separates accounts but they find quite hard to manage household and business finances separately.
We asked the respondents who use at least one listed financial product what was their selection behavior when they made their most recent choice about a financial product or service for the business, appeared that more than half of respondents considered several option form different financial providers before they made final choice.

Only 12% mentioned that they took decision without considering any other options.
Managing and Planning Business Finances The research revealed that in past 24 month more than half of respondents have asked their Family members/Friends some help in accordance of taking financial decisions for the business.

Also, about 1/3 mentions that the requested help to a book-keeper or accountant external to the business.

As for the financial issues businesses asked for help most frequently over the past 24 months, the leading answer is Book-keeping and/or accounting (46%).
Differences between Tbilisi and region were identified in regard with asking for help about accessibility to outsource finances.

It turns out that 9% of businesses operating in Tbilisi and 23% of businesses operating in regions asked for help in regard of accessing finances.

4 Main Findings (2) Research revealed that about half of the business owners track their financial records in electronic format such as MS excel or dedicated software.
Differences were revealed between Tbilisi and regions in regard with management of financial records – if 27% of businesses operating in Tbilisi process information not in electronic format, but on papers, this index is 37% in regions.

Respectively, rate of keeping records in electronic format is lower in regions compared to Tbilisi (Tbilisi 60%, regions – 41%).
Most of the business owner just agreed or strongly agreed the following ideas in accordance of financial behavior, for example 80% of business owners agreed that they keep secure data and information about the business , 75% of them compare the cost of different sources of finance for the business; 79% of respondents forecast the profitability of the business regularly.

Also 87% of business owners mentioned they adjust their planning according to the changes in economic factors.
Appeared that while making investment for business 83% of business owners take into account its environmental impact also 84% take into account its social impact and 75% of them involve providers in implementing actions with low environmental impact.
As for the attitudes of business owners toward managing the business appeared that 71% of owners set long term financial goals for the business and strive to achieve them, 59% of them is confident to approach banks and external investors to obtain business finance.

67% of business owners mentioned that they prefer to follow their instinct rather than to make detailed financial plans for their business.

Also 42% says that they prefer high-risk and high-yield projects over low-risk and low-yield projects.
According to assessment of specific parameters we have estimated financial knowledge, financial attitude and behavior scores.
In terms of Financial knowledge, we provided respondents with 5 statements that were related to education and awareness on finances, only one out of 5 statements were incorrect - “Dividends are part of what a business pays to a bank to repay a loan”, 41% of respondents believed this statement to be true, ¼ noted they did not know whether it was correct or incorrect or refused to answer this question.
As for the rest of 4 statements that were read to the respondents, in the majority of cases the statements were deemed correct.

Financial knowledge index varies from 0 to 5 points.

Overall index of financial knowledge was estimated with 3.1 points.

This index is different in Tbilisi and regions, in case of Tbilisi – financial knowledge index is 3.4 points and 2.8 points in regions.
As for Financial behavior index, score was estimated through combination of answers given to different questions - Basic payment and deposit services, Keeping records and accounting Risk and insurance, Financial protection, Financing the business, Planning beyond the short term, External influences.

In total, 9 questions were processed, respectively, financial behavior index varies from 0 to 9 points.

In the end, overall index of financial behavior was 5.6 points.
This index is different for Tbilisi and regions – in case of Tbilisi, the said index reached 5.9 points and amounted to 5.3 points in regions.

The Financial attitude index varies from 0 to 3 points.

The overall index of financial attitude is 1.6 points.
These data are slightly different in Tbilisi and the region - The rate of financial attitude in Tbilisi is equal to 1.8, while in regions the index amounted to 1.5 points The Overall financial literacy score was calculated based on financial attitude, financial knowledge and financial behavior scores.

The sum of the three components listed above, was expected to range from 0 to 17 point.

Considering the final results, the Financial Literacy Index in Georgia is above average and equals 10 score out of 17.
5 Main Findings (3) Covid-19 Impact on Business The study shows that ¼ of the surveyed companies had a website at the end of 2019 from which they could sell their products / services, share of owning similar website increased of 5% over the current period.

In general there are no big changes in accordance of digital activities compared to the before pandemic and the current periods.
Within the scopes of the study, we asked respondents to what extend did the Covid-19 pandemic affected different financial assets of their business.

It turns out that the most affected area was profitability of businesses as it was named in 81% of cases that profitability of the company decreased/decreased a In addition, businesses report on decreased of general turnover, as declared by 79% of business owners, company’s turnover decreased/decreased a lot.

lot.
lot.

As for the issues that were the least affected by the Coronavirus pandemic, respondents named quantity of employees and debts – 72% of them reported on unchanged number of employees, 52% reported of unchanged financial debts, in case of the latter, 22% of respondents declared that as a result of the pandemic, their financial debts increased/increased significantly.
Almost half of the inquired companies note that as a result of the Coronavirus pandemic, their company appeared in the situation when cash flows were not sufficient to cover financial liabilities or to reimburse expected business costs.

The said index was higher in regions than in Tbilisi – 42% of companies that operate in the capital city faced the lack of cash flow, while the share of such companies was 53% in regions.
Main strategies the companies applied to cope with the said situation included cutting business operation costs (46%), utilization of owner’s personal/family money or credit (44%), temporary suspend of business operation (38%).
As for differences in strategies by regions and Tbilisi, it turned out that in case of Tbilisi, companies cut salaries/reimbursement of owners in 10% more cases, compared to Tbilisi, 12% more companies in regions had to take a new debt to cover liabilities or cope with foreseen costs.

In addition, in Tbilisi, 12% more companies had to pay payables and salaries belated.
After the start of the pandemic, 1/5 of the inquired companies applied for a loan for business needs, 66% of them were rewarded with a loan.

Among them, who did not apply for a loan, 64% declared that their business did not require additional funding.

As the study demonstrates, in the majority of cases, companies did not use the measurements provided by the state during the pandemic - Cash benefits (59%), Tax benefits(64%), Loan deferment (64%), Loan Interest Subsidy (84%).
Reasons behind refusing the state measurements are different, for example, as declared by 38% of companies, they did not use Loan deferment as they did not need it, 45% could not use cash benefits as their companies were not entitled for this exemption, also 54% of companies could not use the Loan interest subsidy because of the same reason.

6 Main Findings (4) Description of companies and education of company owners 99% of companies inquired within the study are an autonomous profit-oriented business.
Quantity of employees working for the company was distributed as follows: in total, in 38% of cases business owners run the business and do not have additionally hired staff.

Number of such companies is 5% higher in case of companies that operate in regions (40%).
As for business owners who participated in the study, more than half of them have University-level education, 39% of business owners whose education level is university-level education or post graduate education or equivalent, have attended classes related to business, economy or finances.

Overall, ¼ of business owners have attended any type of trainings in finance management.
It is also worth mentioning that 43% of inquired respondents have more than 10 years of experience in business management (as an owner).

As for experience of their parents in business management, only 14% of business owners noted that any of their parents had business in the past.

7 Financial Products Financial Product Awareness| By Tbilisi and Regions Please can you tell me whether you have heard of this type of financial product or service in the context of your business ?
Total Tbilisi Regions Property insurance Micro-credit Loan from micro-finance organization Business loan from a bank Deposit Leasing or hire purchase Life insurance Bank collateral Bank overdraft or credit line Corporate bonds Third-party liability insurance Trade credit Business interruption insurance A loan from loan provider Green bonds or loans Public equity Bank accreditive Angel investment Derivatives Venture capital Initial coin offering (ICO) Factoring Crowdfunding/P2P Mezzanine finance 94% 90% 90% 90% 86% 79% 76% 67% 62% 61% 61% 61% 58% 37% 36% 35% 34% 19% 16% 14% 13% 12% 7% 4% Base:N= Base: N=418 30% 29% 32% 27% 13% 12% 8% 11% 8% 4% 4% Base:N=584 9 Financial Product Usage| By Tbilisi and Regions Please can you tell me whether you have used of this type of financial product or service in the context of your business ?
Trade credit Business loan from a bank Bank overdraft or credit line Property insurance Deposit Micro-credit Loan from micro-finance organization Third-party liability insurance Bank collateral Life insurance Crowdfunding/P2P Business interruption insurance Leasing or hire purchase A loan from loan provider Mezzanine finance Bank accreditive Green bonds or loans Angel investment Initial coin offering (ICO) Venture capital Public equity Derivatives Corporate bonds Factoring Database: Due to financial product usage was asked to the respondents who have heard about specific product the sample size of each product is different Total 33% 31% 17% 15% 14% 12% 12% 11% 11% 9% 5% 4% 4% 3% 2% 2% 2% 1% 1% 1% 1% 1% 1% Tbilisi 30% 25% 15% 20% 11% 8% 8% 12% 11% 8% 2% 4% 4% 4% 4% 3% 2% 1% 1% 1% 1% Regions 35% 36% 19% 10% 17% 15% 15% 10% 10% 10% 10% 4% 4% 2% 1% 2% 1% 1% 1% 10 Bank account usage | By Tbilisi and Regions Do you have Current or savings account at a bank for your business?
Total Tbilisi Regions Yes 75% 83% 68% No 25% 16% 32% Refused to answer 0.1% Don't know 0.1% 0.2% 0.2% Base:N=1002 Base: N=418 Base:N=584 11 Managing of Bank account for business| By Tbilisi and Regions Can you tell me which of these statements best represents your situation?
I manage strictly separate accounts for my household and for my business I use the same account for both my household and business finances I have separate accounts for my household and for my business, but I find it quite difficult to manage household and business finances separately Total 36% 21% 17% Tbilisi 44% 18% 20% Refused to answer 0.4% Don't know 1% 1% 1% Regions 30% 23% 14% 0.3% 1% Not applicable 25% 17% 32% Base:N=1002 Base: N=418 Base:N=584 12 Managing of Bank account for business| Among the business which own bank account or saving Can you tell me which of these statements best represents your situation?
Total Tbilisi Regions I manage strictly separate accounts for my household and for my business 48% 53% I use the same account for both my household and business finances I have separate accounts for my household and for my business, but I find it quite difficult to manage household and business finances separately 28% 23% Refused 1% Don't know 1% 21% 24% 1% 2% 44% 34% 21% 1% 1% Base:N=740 Base: N=345 Base:N=395 13 Financial Product Selection | By Tbilisi and Regions Which of the following statements best describes how you made your most recent choice about a financial product or service for the business ?
Total 31% Tbilisi 29% Regions 32% I considered several options from different financial providers before making my decision I considered the various options from one financial provider 6% I didn’t consider any other options at all 7% I looked around but there were no other options to consider 4% Refused to answer 1% Don’t know 9% 6% 7% 5% 0.2% 7% 6% 7% 3% 1% 10% Not applicable (Does not owns any financial product) 42% 45% 41% Base:N=1002 Base: N=418 Base:N=584 Note: 42% of respondents does not name any financial product in financial usage question Note: No significant difference between Tbilisi & Regions 14 Financial product selection| Owns at least one financial product Which of the following statements best describes how you made your most recent choice about a financial product or service for the business ?
I considered several options from different financial providers before making my decision 54% 53% 54% Total Tbilisi Regions I didn’t consider any other options at all 12% I considered the various options from one financial provider 11% I looked around but there were no other options to consider 7% Refused 1% Don’t know 15% 13% 12% 9% 0.4% 13% 11% 11% 5% 2% 17% Note: No significant difference between Tbilisi & Regions 15 Base:N=575 Base: N=224 Base:N=351 Managing and Planning Business Finances Assistance request in taking financial decisions| By Tbilisi and Regions In the past 24 months [or since business creation if the business existed for less than 24 months], has any of these people helped you in taking financial decisions for the business?
Total Tbilisi Regions Family or friends 52% A book-keeper or accountant external to the business 31% A business partner 19% A financial intermediary (e.g.
bank) 13% A public agency or institution 5% A business financial advisor external to the business 4% Lawyers 0.3% 48% 31% 23% 12% 6% 4% 1% 55% 31% 16% 13% 5% 4% 4% Base:N=1002 Base: N=418 Base:N=584 17 Assistance request in taking financial decisions| By Tbilisi and Regions In the past 24 months [or since business creation if the business existed for less than 24 months], have you asked for help about any the following matters?
Total Tbilisi Regions Book-keeping and/or accounting 46% 42% 49% Any type of taxes 23% 24% Accessing external financing 21% Assessing the business’ exposure to any type of risk 13% Evaluating the financial performance of the business 9% 19% 14% 10% Managing cash flow and/or liquidity needs 9% 10% 22% 23% 13% 8% 8% Base:N=1002 Base: N=418 Base:N=584 18 Financial Record Tracking| By Tbilisi and Regions How do you keep track of the financial records of the business?
Total Tbilisi Regions In electronic format (e.g.

MS Excel or dedicated software) 49% In paper form (e.g.

noting them in a notebook; keeping receipts and invoices) 32% Someone else does it for me (e.g.
an accountant) 10% I keep track of financial records in my head 7% I do not usually keep track 1% Refused to answer 0.4% Don’t know 1% 60% 27% 41% 37% 7% 6% 0.2% 1% 13% 8% 1% 1% 1% Base:N=1002 Base: N=418 Base:N=584 19 Financial Behavior| Total Picture Thinking about your business, would you agree or disagree with the following statements?
Strongly agree Agree Disagree Strongly disagree Refused to answer Don’t know Strongly agree/Agree I keep secure data and information about the business 20% I compare the cost of different sources of finance for the business I forecast the profitability of the business regularly I adjust my planning according to the changes in economic factors When I make an investment for the business, I take into account its environmental impact When I make an investment for the business, I take into account its social impact 18% 21% 23% 23% 24% I involve my providers in implementing actions with low environmental impact 18% 57% Database: Overall Picture N= Attitudes toward managing business| Total Picture Thinking about your business, would you agree or disagree with the following statements?
Strongly agree Agree Disagree Strongly disagree Refused to answer Don’t know Strongly agree/Agree I set long term financial goals for the business and strive to achieve them 19% 52% 21% 1% 2% 4% I am confident to approach banks and external investors to obtain business finance 14% 46% 25% 5% 2% 9% I prefer high-risk and high-yield projects rather than low-risk and low-yield projects 8% 34% 44% 6% 1% 7% I prefer to follow my instinct rather than to make detailed financial plans for my business 14% 53% 24% 4% 4% 1% Database: Overall Picture N=1002 71% 59% 42% 67% 21 Retirement Funding| By Tbilisi and Regions Have you thought about how you will fund your own retirement or maintain yourself when you will no longer work due to old age Total Tbilisi Regions Yes 51% No 49% 54% 46% 49% 51% Refused to answer 0.2% 1% Note: No significant difference between Tbilisi & Regions 22 Base:N=1002 Base: N=418 Base:N=584 Functioning strategy in case of robbery| By Tbilisi and Regions Imagine that tomorrow you discover that most of the equipment that you need to operate the business has been stolen (it could be computers, vehicles or other equipment).
Which one of these statements best represents what you would do?
Total Tbilisi Regions I don’t know, I have never thought about how I would cope I would take a loan to buy new equipment I would use some personal or household funds I would use money that my business has set aside for emergencies I would stop my business temporarily or for good I would claim insurance on all or part of the equipment I would ask family members or friends to lend me money or equipment 22% 16% 15% 11% 11% 10% 8% I would ask for state funding 0.1% Refused 1% Don't know 6% 20% 14% 17% 15% 10% 13% 8% 1% 4% 24% 18% 14% 8% 12% 8% 9% 0.2% 1% 7% Base:N=1002 Base: N=418 Base:N=584 23 Attitudes toward managing business| Total Picture I would like to know whether you think the following statements are true or false: TRUE FALSE Don’t know Refused Dividends are part of what a business pays to a bank to repay a loan 41% 35% 23% 2% When a company obtains equity from an investor it gives the investor part of the ownership of the company 62% 21% 16% 1% If a financial investment offers the chance to make a lot of money it is likely that there is also a chance to lose a lot of money High inflation means that the cost of living is increasing rapidly 75% 72% 11% 12% 1% 19% 9% 1% A 15-year loan typically requires higher monthly payments than a 30-year loan of the same amount, but the total interest paid over 63% 23% 12% 2% Database: Overall Picture N=1002 24 Financial Literacy Scores| Tbilisi & Regions Overall Score Out of 17 10 0 0 Total Tbilisi Regions Total Tbilisi Regions Financial Knowledge Score 3.1 3.4 2.8 Financial Behavior Score 5.6 5.9 5.3 5 9 0 Total Tbilisi Regions Financial Attitude Score 3 1.6 1.8 1.5 Database: Overall Picture N=1002 25 Financial Literacy Scores| Tbilisi & Regions Overall Score Out of 100 60 Financial Knowledge Score / Out of 100 Total Tbilisi Regions 18 20 16 Financial Behavior Score / Out of 100 Total Tbilisi Regions 33 35 31 Financial Attitude Score / Out of 100 Total Tbilisi Regions 9 10 9 Database: Overall Picture N=1002 26 Covid-19 Impact on Business Business situation by the end of
 2019| Total Picture Thinking about your business, how would you evaluate the level of the following items at the end of 2019 Total Base: N= Tbilisi Base: N=418 Regions Base: N= 584 Too high Quite high Adequate Quite low Too low Refused to Answer Not applicable Don’t know Liquidity 3% 8% Short-term financial debt 2% 7% 35% 31% 15% 12% 10% 10% 6% 15% 9% 21% 10% 5% Long-term financial debt 4% 6% 25% 13% 8% 27% 10% 7% Owner(s)’/Shareholder(s)’ funds 2% 5% 33% 17% 10% 18% 10% 6% Liquidity 2% 10% Short-term financial debt 2% 6% 37% 34% 13% 16% 7% 10% 12% 11% 20% Long-term financial debt 3% 5% 24% 12% Owner(s)’/Shareholder(s)’ funds 1% 6% 35% 11% 14% 29% 11% 17% 10% 5% 6% 6% 6% 10% 10% Liquidity 4% 7% Short-term financial debt 2% 8% Long-term financial debt 4% 7% Owner(s)’/Shareholder(s)’ funds 2% 4% 33% 29% 26% 31% 18% 9% 13% 10% 7% 18% 7% 21% 10% 5% 14% 5% 26% 20% 8% 19% 10% 10% 7% 7% 28 Digitalization Before Pandemic and Present Period | Total Picture Thinking about the period before the COVID-19 pandemic, at the end of 2019, did you have or did you do any of the following things: and thinking about now, do you have, or have recently done, any of the following things: At the end of 2019 Present Period Have a dedicated website to sell the products or services of the business Have opened a bank account completely online Have a dedicated website to showcase the products or services of the business Have signed a financing contract (e.g.
a bank loan) completely online 25% 25% 19% 13% Have signed an insurance contract completely online 10% 30% 23% 22% 13% 12% Database: Overall Picture N=1002 29 Digitalization Before Pandemic and Present Period | Tbilisi Thinking about the period before the COVID-19 pandemic, at the end of 2019, did you have or did you do any of the following things and thinking about now, do you have, or have recently done, any of the following things At the end of 2019 Present Period Have opened a bank account completely online 34% Have a dedicated website to sell the products or services of the business Have a dedicated website to showcase the products or services of the business Have signed a financing contract (e.g.
a bank loan) completely online Have signed an insurance contract completely online 28% 24% 17% 15% 28% 32% 28% 15% 16% Database: Overall Picture N=418 30 Digitalization Before Pandemic and Present Period | Regions Thinking about the period before the COVID-19 pandemic, at the end of 2019, did you have or did you do any of the following things and thinking about now, do you have, or have recently done, any of the following things At the end of 2019 Present Period Have a dedicated website to sell the products or services of the business 23% 29% Have opened a bank account completely online 19% Have a dedicated website to showcase the products or services of the business 15% Have signed a financing contract (e.g.
a bank loan) completely online 10% Have signed an insurance contract completely online 6% 19% 18% 11% 10% Database: Overall Picture N=584 31 Digital activities before covid-19 and Present period Thinking about the period before the COVID-19 pandemic, at the end of 2019, please indicate how large the following digital activities were for your business.

And what about now?
At the end of 2019 Very large Quite large Quite small Very small Refused to Answer Not applicable Don’t know Sales of products or services through your business’ website as a percentage of total sales 1% 7% 8% 8% 1% Sales of products or services through a shared online platform as a percentage of total sales 1% 3% 7% 7% 1% Online payments from customers as a percentage of total payments from customers Online payments to suppliers as a percentage of total payments to suppliers Use of social media for business activity such as advertising or networking Number of operations on current account conducted online, as a percentage of total operations on the current account 5% 8% 13% 9% 1% 6% 9% 13% 9% 1% 3% 7% 10% 8% 1% 10% 13% 15% 9% 1% 49% Present Period Very large Quite large Quite small Very small Refused to Answer Not applicable Don’t know Sales of products or services through your business’ website as a percentage of total sales 2% 5% 11% 11% 1% Sales of products or services through a shared online platform as a percentage of total sales 1% 3% 9% 10% 1% Online payments from customers as a percentage of total payments from customers Online payments to suppliers as a percentage of total payments to suppliers Use of social media for business activity such as advertising or networking Number of operations on current account conducted online, as a percentage of total operations on the current account Covid-19 Impact| Total Picture How would you describe the impact of the COVID-19 crisis on the following items related to your business ?
Large decrease Decrease Quite unchanged Increase Large increase Refused to Answer Don’t know Large Decrease/Decrease Overall impact 32% 36% 19% 6% 4% 3% 1% Turnover Profits 37% 37% Number of employees 6% 16% 42% 44% 72% 15% 12% 3% 2% 1% 1% 3% 1% 1% 3% 1% 1% 2% 3% Debt 6% 15% 52% 19% 3% 4% 1% Liquidity 11% 32% 38% 5% 1% 3% 11% 68% 79% 81% 23% 22% 43% Database: Overall Picture N=1002 3333 Covid-19 Impact| Tbilisi How would you describe the impact of the COVID-19 crisis on the following items related to your business ?
Large decrease Decrease Quite unchanged Increase Large increase Refused to Answer Don’t know Large Decrease/Decrease Overall impact 34% 34% 19% 5% 5% 3% 1% Turnover Profits 38% 38% Number of employees 9% 18% 40% 41% 67% Debt 8% 17% 53% Liquidity Database: Overall Picture N=418 3434 Covid-19 Impact| Regions How would you describe the impact of the COVID-19 crisis on the following items related to your business ?
Large decrease Decrease Quite unchanged Increase Large increase Refused to Answer Don’t know Large Decrease/Decrease Overall impact 30% 37% 19% 8% 3% 3% Turnover Profits 36% 36% Number of employees 5% 14% 44% 46% 75% 15% 2% 2% 1% 1% 12% 3% 1% 2% 1% 3% 2% Debt 5% 14% 51% 22% 3% 1% 4% Liquidity 9% 30% 41% 5% 1% 4% 11% 67% 80% 82% 19% 19% 38% Database: Overall Picture N=584 3535 Covid-19 affection on cash needs | Tbilisi & Regions Since the start of the COVID-19, has the business been confronted with situations where cash inflows were insufficient to cover cash outflows or to pay for expected expenses of the business?
When this happened, what were the main strategies that you put in place to cover immediate cash needs?
Total 48% Base:N=1002 46% 44% 38% 34% 32% Tbilisi 42% Regions 53% Base: N=418 Base:N=584 44% 42% 37% 34% 38% 10% 22% 22% 11% 12% 3% 1% 47% 44% 39% 34% 28% 22% 22% 11% 11% 9% 1% 2% 0.3% Base:N=490 Base: N=179 Base:N=311 36 Reduced costs of operating the business Used owner(s’) personal/household funds or credit Suspended the business temporarily or for good Asked funds to family/friends Reduced the salary for the owner(s) Asked credit, payment dilations from suppliers Took new debt for the business Paid staff, taxes or loan repayments late Asked advance from clients or solicited them to pay amounts due Used available liquidity Asked funds to new partners Claimed insurance Other - Asked money from private money-lender 22% 17% 15% 11% 10% 2% 1% 0.2% Loan application for Business| Total Picture Since the start of the COVID-19 pandemic, have you applied for a new loan for the business?
Total Picture 0.4% 0.3% 20% 80% What was the outcome of the application?

Applied The loan has been fully obtained 66% The application has been rejected 23% The loan has been only partially obtained 7% The loan has been obtained but I refused the proposal Refused to Answer 4% 1% Why didn’t you apply for a loan?
Base:N=197 Yes No Refused to Answer Don't know Base:N=1002 Didn’t apply New financing was not needed 64% Did not think the loan would be approved 14% Application procedure was too complex 10% Don't know 9% Refused to Answer 3% Base:N=798 37 Loan application for Business| Tbilisi Since the start of the COVID-19 pandemic, have you applied for a new loan for the business?

Tbilisi 1% 1% 19% 80% What was the outcome of the application?
Applied The loan has been fully obtained 57% The application has been rejected 30% The loan has been only partially obtained 8% The loan has been obtained but I refused the proposal Refused to Answer 4% 1% Why didn’t you apply for a loan?
Base:N=197 Yes No Refused to Answer Don't know Base:N=1002 Didn’t apply New financing was not needed 67% Did not think the loan would be approved 12% Application procedure was too complex 10% Don't know 8% Refused to Answer 3% Base:N=336 38 Loan application for Business| Regions Since the start of the COVID-19 pandemic, have you applied for a new loan for the business?

Regions 0.3% 0.2% 20% 80% What was the outcome of the application?
Applied The loan has been fully obtained 73% The application has been rejected 18% The loan has been only partially obtained 5% The loan has been obtained but I refused the proposal Refused to Answer 4% 1% Why didn’t you apply for a loan?
Base:N=197 Yes No Refused to Answer Don't know Base:N=1002 Didn’t apply New financing was not needed 61% Did not think the loan would be approved 15% Application procedure was too complex 10% Don't know 10% Refused to Answer 3% Base:N=462 39 Government Measure Usage | Tbilisi & Regions • Please can you tell me whether you have used the following government measures introduced during the COVID-19 crisis to support your firms’ financial conditions?
• Could you tell me the main reason for not using this government measure?
Used Not used Refused to Answer Don’t know Total Base: N=1002 Tbilisi Base: N=418 Regions Base: N= 584 Cash Benefits Tax Benefits Loan Deferment 40% 35% 30% Loan Interest Subsidy 9% Other measures Cash Benefits Tax Benefits 36% 40% Loan Deferment 31% Loan Interest Subsidy 10% Other measures Cash Benefits Tax Benefits Loan Deferment 44% 32% 29% Loan Interest Subsidy 8% Other measures Reason of not using government measures| Total Picture Could you tell me the main reason for not using this government measure ?
Not used Not aware of the measure Not needed/ not convenient Not eligible/Not applicable Refused to Answer Don’t know Cash Benefits 59% 16% 32% 45% 7% Tax Benefits 64% Loan Deferment 64% Loan Interest Subsidy 84% N=598 N=648 N=641 N=844 21% 25% 45% 1% 8% 3% 38% 57% 1% 2% 14% 28% 54% 1% 4% 4141 Reason of not using government measures | Tbilisi Could you tell me the main reason for not using this government measure ?
Not used Not aware of the measure Not needed/ not convenient Not eligible/Not applicable Refused to Answer Don’t know Cash Benefits 64% 10% 41% 45% 3% Tax Benefits 60% Loan Deferment 63% Loan Interest Subsidy 83% N=264 N=255 N=266 N=348 17% 36% 40% 0.4% 7% 2% 38% 58% 1% 2% 10% 32% 56% 1% 2% 4242 Reason of not using government measures | Regions Could you tell me the main reason for not using this government measure ?
Not used Not aware of the measure Not needed/ not convenient Not eligible/Not applicable Refused to Answer Don’t know Cash Benefits 55% 21% 24% 45% 10% Tax Benefits 67% Loan Deferment 64% Loan Interest Subsidy 85% N=325 N=393 N=375 N=496 24% 18% 49% 1% 9% 3% 37% 57% 1% 2% 18% 24% 53% 1% 4% 4343 Business Type Description Business Forms| By Tbilisi and Regions How would you characterize your business, is it …?
Total Tbilisi Regions An autonomous profit-oriented business, making independent financial decisions 99% 100% 99% A subsidiary of another business 1% 0.4% 1% Refused to answer 0.2% 0.4% Note: No significant difference between Tbilisi & Regions 45 Base:N=1002 Base: N=418 Base:N=584 Number of Employees | By Tbilisi and Regions In which of these categories does the number of full-time equivalent people working in this business (including yourself) fit?
Total Tbilisi Regions 1 person (self-employed respondent) 38% From 2 to 4 people 42% From 5 to 9 people 11% From 10 to 19 people 6% From 20 to 49 people 3% 35% 39% 15% 7% 4% 40% 45% 9% 5% 3% Base:N=1002 Base: N=418 Base:N=584 46 Business foundation year | By Tbilisi and Regions In which year did your business begin operations?
Total Tbilisi Regions 1989-1995 2% 1996-2000 5% 2001-2005 7% 1% 3% 7% 2006-2010 15% 16% 2011-2015 25% 2016-2019 31% 26% 31% 2% 6% 8% 14% 24% 31% 2020-2021 10% 10% 10% Base:N=1002 Base: N=418 Base:N=584 47 Turnover of Businesses | By Tbilisi and Regions What was the approximate annual turnover of this business in the previous fiscal year?/What do you expect to be the annual turnover of this business this fiscal year Total Tbilisi Regions 0 – 15 000 Gel 47% 40% 53% 15 001 – 30 000 Gel 18% 30 000 – 100 000 Gel 18% 100 001 – 500 000 Gel 9% 500 001 – 1 500 000 Gel 6% 13% 21% 12% 10% 1 500 001 -5 000 000 Gel 3% 4% 22% 15% 6% 3% 2% Base:N=1002 Base: N=418 Base:N=584 48 Demography Demography| By Tbilisi and Regions Respondents Age and Gender Gender Age Total Tbilisi Regions Female 52% Male 48% 52% 48% 52% 48% 20-29 6% 6% 7% 30-39 40-49 50-59 60-69 24% 29% 24% 12% 70-79 4% 80 or older 0.2% Refused 0.2% 27% 33% 22% 10% 2% 0.2% 0.2% 22% 26% 26% 13% 5% 0.2% 0.1% Note: No significant difference between Tbilisi & Regions Base:N=1002 Base: N=418 Base:N=584 5050 Business Owner’s Education| By Tbilisi and Regions What is the highest educational level that you have completed?
University-level education (e.g.

degree or higher-level vocational training) 54% 57% 53% Total Tbilisi Regions Post-graduate education or equivalent (e.g.
master’s degree, PhD or advanced professional training) 26% 32% Upper secondary school or high school 19% Lower secondary school or middle school (where relevant) 1% 1% Refused to Answer 0.1% Base:N=1002 Base: N=418 23% 24% 1% 0.2% Base:N=584 Have you received education in subjects related to business, economics or finance as part of your school or university education?
Yes No 39% 41% 39% 60% 59% 61% Don't know 1% 1% 1% Note: No significant difference between Tbilisi & Regions Base: Business owners who has education level of Post-graduate education , University-level education, Upper secondary school or high school Base:N=995 Base: N=415 Base:N=580 5151 Financial Knowledge Evaluation| By Tbilisi and Regions Have you ever received training on how to manage business finances?
Total Tbilisi Regions Yes 24% 25% 23% No 76% 75% 77% Refused to answer 0.1% Don’t know 0.1% 0.1% 0.2% Base:N=1002 Base: N=418 Base:N=584 Note: No significant difference between Tbilisi & Regions 52 Business Owning Experience| By Tbilisi and Regions For how long have you been a business owner, also including any previous businesses?
Total Less than 2 years 9% Between 2 and up to 5 years 17% Between 5 and up to 10 years 30% More than 10 years 43% Refused 1% Don't know 0% Tbilisi 10% 16% 28% 46% 1% 0% Regions 9% 19% 31% 41% 1% 0% Could you tell me whether any of your parents currently own a business, or owned a business in the past?
No 86% 84% 87% Yes – at least one of my parents is or was a business owner 14% Don't know 0.3% 16% 0.2% 12% 0.3% Note: No significant difference between Tbilisi & Regions Base:N=1002 Base: N=418 Base:N=584 5353