Entrepreneur returns to Hardscrabble Life as Covid-19 wipes out his business

Mr. Rizky’s business has closed. His relationship with the woman he planned to marry has ended. The 32-year-old now sleeps on a sofa bed in a room adjoining a friend’s woodworking shop.

“This is the lowest level I have ever been,” he said.

While struggling businesses in advanced economies have received help cushioning the blow from the pandemic, cash-strapped developing countries have provided minimal or no support. Banks are reluctant to grant loans to such companies, which they consider riskier than large companies.

Many small and medium-sized businesses have gone bankrupt, said Richard Bolwijn, who heads the investment research arm of the United Nations Conference on Trade and Development. In the developing world, “no recovery can take place” unless these companies take over, he said.

Companies with fewer than 50 employees, as well as the self-employed, account for more than 70% of jobs in developing countries, according to the UN’s International Labor Organization. In Indonesia, which is experiencing its worst economic downturn since the Asian financial crisis almost 25 years ago, a government study in December found that 98% of micro, small and medium-sized businesses saw their incomes plummet during the pandemic and 45% lay off employees. The country never entered a nationwide lockdown, but large-scale epidemics have hurt domestic tourism and depressed retail sales.

Before the pandemic, Yuswati Kastulina sold handmade shirts in two stores in the capital Jakarta. With shoppers avoiding shopping malls for fear of contracting the virus, it closed stores last year, laid off staff and moved business online. Like many entrepreneurs in developing countries, she has struggled to cultivate an online customer base. “I sew myself to bring down production costs because there aren’t too many orders,” she said.

Many of those who had gained the security of the middle class returned to a difficult life.

Mr. Rizky’s parents separated when he was little. Debt collectors frequented their home on the outskirts of Jakarta after the family business failed providing sweets to local restaurants. He left home at 16, sharing a bed in a friend’s dorm to save money at college, where he studied international relations.

While still a student, he started a travel agency, betting that his country’s expanding middle class would pay to have their vacations planned. Maritim Travel Indonesia started in 2011 with trips to the Thousand Islands north of Jakarta and has expanded to destinations like Bali. Two years later, he dropped out of college to focus on growing the business. In 2017, he offered tours to South Korea.

To attract customers online, Mr. Rizky created six websites featuring vacation hot spots and adventurous activities. He branched out into corporate retirement planning, and in 2018 rented a larger office in a two-story commercial building on the outskirts of Jakarta. Eager to devote all of his income to the business, he transformed the second floor of the office into a living space for himself and three employees. The company‘s revenue reached $ 1 million in 2019.

That year, Mr. Rizky embarked on a shopping spree to increase the company’s competitiveness, spending $ 22,000 on equipment, including six digital cameras, new cell phones for sales representatives, laptops, an event audio system and a Toyota car. He planned to pay in installments, much of it with his personal credit cards.

“I had not yet reached my goals,” he said. “I couldn’t relax.”

He would soon find out, as the virus spread through Indonesia, that his investments were inappropriate. Customers have canceled vacations and study trips, and Mr. Rizky has not made any money for two consecutive months. With his office lease paid until early 2021 and growing monthly obligations, he reunited his staff in April of last year and announced, fighting back tears, that they were on leave.

The collapse turned their lives upside down. One of the first employees, Lasyarief Romario, 28, earned twice as much designing tourist routes in Maritim than he did in his previous job packing shipping boxes. That being over, he found work as a mechanic and motorcycle taxis which are commonplace in the streets of Jakarta. His income has fallen by 70%. Instead of working in an air-conditioned office, he transports commuters through the scorching heat.

“Whether we like it or not, we have to do it,” he said.

Mr Rizky thought that if he could switch to a new line of business, he could keep the business afloat until the pandemic receded. He saw an opportunity in the supply of face masks, the prices of which had skyrocketed, and urged his employees on leave to market the equipment for a percentage of sales. But global production of masks increased and before he received his first batch of goods, prices plummeted, forcing them to sell at a loss.

He had another idea: to provide frozen food, including vegetables and sausages, to restaurants in Jakarta. A supplier loaned Mr. Rizky a freezer, which he took to the travel agency last May. Margins were low, however, and insufficient to cover his monthly expenses of around $ 5,000, which included payments for his car, cameras and other purchases before the pandemic.

He contacted the banks but was unlucky. The $ 160 he received in government assistance for small businesses was nowhere near enough to make a dent.

“I felt so stunned,” he said. “Where can I get the money from?” “

In September and October, an increase in coronavirus cases resulted in a dinner ban in restaurants for a week. Demand for her food supplies declined further, and her few remaining employees moved out of the shared living space above the desk. “My team ended up being disappointed because I failed. It weighed on me, “he said.

Last fall Mr. Rizky’s girlfriend asked when they were going to get engaged, and he said it should be pushed back due to his financial problems. They broke. Sitting in his empty office in the Jakarta area one November evening, he called his mother and cried. Fearing that Mr. Rizky might be injured, she contacted her father, who rushed out after midnight. “He kept talking so that my head was not blank,” Mr. Rizky said.

Before dawn, they prayed together for the first time in years.

Mr. Rizky sold much of the commercial equipment starting in December and pawned his car in February. But that wasn’t enough, with lenders continuing to pursue pending payments for the car, cameras, phones and audio system. Since the expiry of his lease in April, Mr. Rizky has lived in a room next to the workshop of a carpenter friend, who gives him free use. To earn money, he helps friends who sell clothes and electronics online get more web traffic.

Mr. Rizky’s father offered to sell the family home to help pay off Mr. Rizky’s debts, which include credit cards and unpaid corporate taxes, which now stand at $ 25,000. “I am absolutely devastated,” he said.

Write to Jon Emont at jonathan.emont@wsj.com