COVID-19 DEBT RELIEF INTERVENTIONS FOR SMMEs
Since the declaration of State of Disaster on 17 March 2020 by the South African government, several programmes and interventions have been introduced by both the public and private sector for Covid-19 Debt Relief.
The pandemic will have a significant impact on the economy, and the hardest hit will be the SMME sector. It is for this reason that programmes and interventions have been put in place. It will be in your best interest as a business owner to take advantage of these. Below is a summary of various debt relief measures that are currently in place, specifically relating to the SMME sector:
1. Debt Relief Fund – Department of Small Business Development (DSBD)
The Department of Small Business Development has made over R500 million available to assist small and medium businesses who are in distress due to the impact of COVID-19
Does my business qualify?
To qualify for this relief, your business must meet the following criteria:
- You must show a direct link between the impact or potential impact of the COVID 19 pandemic on your operations and loss of income to your business
- The business must have been registered with CIPC by at least 28 February 2020;
- The business must – be 100% owned by South African citizens
- The business should employ at least 70% South African nationals
- The business must be registered and compliant with the South African Revenue Service (SARS) and the Unemployment Insurance Fund (UIF)
How much can my business apply for, for Covid-19 Debt Relief fund?
The relief is to fund your working capital (stock, current orders, cashflow) and/or equipment finance. Amounts to be applied for have not been finalised at this stage, the Department is, however, accepting applications. So at this stage, you can apply for an amount based on your best estimate.
How much applying for debt relief funding cost me?
Financing will be at an interest rate of prime less 5%. This means that funding will be at 3,75%. A payment holiday will be applied, and loans can be structured in favourable terms.
If you are found to have fraudulently applied for this fund, you will be punished by paying an interest rate of prime plus 10% i.e. 18,75% per annum.
Where do I access the Covid-19 debt relief fund?
The Department is currently accepting registrations at www.smmesa.gov.za
You can also complete the simplified online application form available from Thursday 2 April 2020 on the following websites:
How long will the process for Covid-19 Debt Relief Fund take?
It will take 7 working days to process an application for funds for debt relief, and if approved, it would take another 5 working days to disburse funds to you.
2. Unemployment Insurance Fund (UIF) – COVID-19 Temporary Employee Relief Scheme
The Temporary Employee Relief Scheme (TERS) is an intervention that will enable you to pay your staff directly during the COVID-19 pandemic and avoid having to retrench anyone where your employees will receive wage payment through the Temporary Employee Relief Scheme (TERS). In terms of the TERS process, the UIF may fund your company if you are affected by COVID-19 directly in relation to the TERS allowance.
Does my business qualify?
TERS will be applicable to your company if your business is:
- registered with UIF
- compliant with the relevant UIF legislation, and
- making your required monthly contributions
Should your business not be compliant, you will be able to undertake to pay outstanding contributions and bring your required declarations up to date within a stipulated timeframe.
Where do I access this fund?
To find out more about the financial assistance options available to you from the UIF to support your employees, you can access further information through a designated mailbox: [email protected]. You will receive an automated response outlining the procedure and information you will require.
What is the process after application?
You will be required to submit all documents as required to UIF via the dedicated mailbox [email protected]. If the spreadsheet is complete, valid, and accurate, it will be moved into an automated calculator to produce the benefit amount due to the beneficiaries, and the total amount to be transferred to the employer, bargaining council, or agreed method. Upon conclusion of the MOA between parties, payment will only be made to you after MOA sign-off between you/Bargaining Council and the fund.
3. Business Growth and Resilience Facility (IDC)
Industrial Development Corporation (IDC) together with the Department of Trade, Industry and Competition have set aside R3 billion to aid medical and hygiene product suppliers with capital to ensure they can meet the high demand during this COVID-19 pandemic.
Essential services businesses will need to obtain approval from the Department for authorisation to trade at www.bizportal.gov.za
Where do I access this fund?
IDC related funding for COVID-19 can be accessed at
https://www.idc.co.za/2020/03/24/idc-interventions-in-response-to-covid-19/
4. National Empowerment Fund (NEF)
R200 million funding for black entrepreneurs to manufacture and supply a range of medical products to help the country flatten the curve of COVID-19 has been made available. The National Empowerment Fund will administer this.
Does my business qualify?
To qualify for this relief, your business must meet the following criteria: The business must
- be a registered South Africa company
- be in good standing with a valid tax clearance certificate at assessment as well as before the loan is disbursed
- be a current and registered supplier with retailers and other institutions in good standing or have a purchase order/contract/letter of intent
- have a project with a minimum requirement of R500 000, require working capital or funds to purchase machinery and equipment, the fund WILL NOT service any debt or help settle monies owed
- the project must result in retaining or increasing direct jobs
- have greater than fifty percent (>50%) Black shareholding and management control
How much can my business apply for?
You may apply for funding from R500 000 and R10 million in concessionary loans to purchase machinery, equipment and raw materials and to fund other working capital requirements for the manufacture and supply of medical masks, sanitizers, dispensers and related healthcare products.
How much will this cost me?
The loans will be offered at 0% interest for the first year and after that at 2.5% per annum. Once disbursed you will be accorded a 12 month repayment holiday to help your businesses stabilise.
How long will it take?
Applications are expected to take a total of 2 weeks from application to disbursement, following receipt of all relevant documents.
Where do I access this fund?
The fund can be accessed through NEF on [email protected] and on 011 305-8080 for this emergency funding.
Applications are open at https://www.nefcorp.co.za/wp-content/uploads/2020/03/NEF-COVID-19-Fund-Application-Form_Active-fields.pdf
For further information you can refer to the following link: https://www.nefcorp.co.za/wp-content/uploads/2020/03/COVID-Fund-Brochure-2020_9.pdf.pdf
5. Tourism Relief Fund (Dept of Tourism)
The Department of Tourism has made R200 million available to assist SMEs in the tourism and hospitality sector who are in distress due to the new travel restrictions.
Does my business qualify?
To qualify for this relief, your business must meet the following criteria: The business must
- be formally registered with the Companies and Intellectual Property Commission (CIPC)
- not make more than R2.5 million in revenue per annum
- Must have a valid tax clearance certificate.
- Guaranteed employment for a minimum number of staff for a period of 3 months.
- Proof of minimum wage compliance.
- Must provide proof of UIF registration for employees employed by the business.
- Be an existing tourism-specific establishment as outline in the scope of application (suppliers and intermediaries are not eligible).
- Must be in existence for at least one business financial year.
- Prove that the relief is required as a result of the impact of COVID-19.
- Must submit statements of financial position; over 12 months’ bank statement, balance sheet, income statements, cash flow statements.
- Indicate the intended use of the resources.
Where do I access this fund?
The Department is currently developing a call centre to handle enquiries. More information can be accessed at https://www.tourism.gov.za/AboutNDT/Ministry/News/Pages/COVID-19_interventions_for_the_tourism_sector.aspx
6. Spaza Shop Support Scheme (DSBD)
The Department of Small Business Development has made R500 million available to assist Spaza Shops who are in distress due to the impact of COVID-19
Does my business qualify?
To qualify for this relief, your business must meet the following criteria: The business must
- be an owner-managed and owner-operated Spaza Shop
- be willing to register on CIPC, SARS and with the UIF
- be able to provide proof of banking
- hold permits to trade (if trading illegally, you must go to nearest municipality and register)
- be willing to stock products by other South African SMMEs
- be willing to submit monthly Management Accounts
How much can my business apply for?
The relief is a credit facility to buy stock. Spaza Shops will also receive funding for other compliance support services.
How much will this cost me?
Financing costs have not been confirmed yet.
Where do I access this fund?
The fund will be accessible from SMME SA website launching on 2 April 2020.
7. Business Partners (Rupert Family and Remgro)
Business Partners will administer R1 billion rand fund from the Rupert family and Remgro. The fund will be available to all South African businesses.
Does my business qualify?
To qualify for this relief, your business must meet the following criteria: The business must
- be a tax compliant South African business
- be able to prove that your business is in financial distress as a result of the COVID-19 pandemic
How much can my business apply for?
You may apply for funding from R250 000 to R1 million for the 60 months loan.
How much will this cost me?
Business Partners is looking at a combination of grants and low-interest loans. Financing costs have not been confirmed yet.
Where do I access this fund?
The fund will be accessible from Business Partners. Their website is https://finance.businesspartners.co.za/
8. South African Future Trust (Oppenheimers)
R1 billion has been made available by the Oppenheimer family to South African SMEs to allow ones that are suffering from short-term cashflow constraints to continue operations during the COVID-19 crisis while retaining employees.
Does my business qualify?
To be eligible for support, your business will need to meet the following criteria:
- not make more than R25 million per year
- the ability to demonstrate the impact of COVID-19 on your operations now, or in the future
- have been trading for at least 24 months
- your accounts must be in good standing
How much can my business apply for?
Funding will be paid out directly to your employees as interest-free loans, employees themselves will not be liable to pay the money back, but your company will be. It is expected that the typical loan amount per employee will be around R750/week, for 15 weeks.
When can I access the funding?
Applications only formally open from Friday, 3 April 2020.
How long will it take?
It will take up to seven days after signature of the loan agreement for the first week’s payments to be deposited into your employee/s’ account/s, dependent on the day that the signed loan agreement was received.
Where do I access this fund?
You will be able to apply directly with your bank from Friday, 3 April. Mechanisms will be communicated and made available shortly; please keep checking for updates with your bank for when this will go live.
9. Small Enterprise Finance Agency (SEFA) Covid-19
Small businesses funded by the Small Enterprise Finance Agency (Sefa) will be given a payment holiday for the next 6 months, with certain conditions applicable.
Where do I access this fund?
Click here for the application process via www.smmesa.gov.za
- Standard Bank
From 1 April 2020, Standard Bank will support SMMEs with a payment holiday for 90 days (01 April 2020 until 30 June 2020). The interest and fees accrued over 90 days will be capitalised into your outstanding balance, changing the terms of repayment to a later date. After the 90 day period is complete, the new repayment will become due.
Does my business qualify?
To qualify for this relief, your business must meet the following criteria: The business must
- South African based
- making less than R20 million per year
- have a business Current Account, Bizlaunch account and Business Lending accounts that are paid up to date
- be in good standing
SMEs not eligible for the Business Interruption Payment Scheme and are experiencing difficulties can still receive help. Standard Bank can also assist with the restructuring and consolidation of your Standard Bank loan agreements.
Where do I access this fund?
The fund will be accessible from the bank’s COVID-19 site at Standard Bank Covid-19 site.
10. First National Bank (FNB) Covid-19 Debt Relief Fund
This is an intervention available from 1 April to 30 June 2020 aimed at providing relief to individual and business FNB customers whose financial stability has been impacted by COVID-19 pandemic.
How much can my business apply for?
For qualifying customers, all COVID-19 interventions will be for all products and will be available for a period of three months, covering the following:
- instalment cashflow relief, during which part or no instalments/repayments will be due for a specific period
- a preferential interest rate will apply to the COVID-19 relief interventions given
- no fees will be charged for any relief granted
- assistance with processing credit insurance claims, where possible
- individualised bridge facilities for those who need it
Where do I access this fund?
The fund will be accessible from the bank’s COVID-19 site at Visit the FNB COVID-19 site.
11. Nedbank Covid-19 Debt Relief Fund
Nedbank has committed to offering individual solutions to cashflow challenges due to the coronavirus; however, they do not have a confirmed opt-out relief policy for a specific category of accounts and or customer.
How much can my business apply for?
Nedbank has undertaken to consider assisting any of their loan agreement customers impacted by the COVID-19 pandemic Nedbank have stated that this support could take the form of:
- deferring your repayments (or part thereof) for a suitable period
- extending your existing loan repayment period (the term) or
- extending further loans to you to manage short term cashflow shortfalls
Furthermore, it was announced that the minimum repayment on all Nedbank credit card products had been automatically reduced to 2,5% of your current balance for the next 3 months. Typically, credit card minimum repayments are set a 5% of your current balance.
Where do I access this fund?
Customers are encouraged to contact the bank directly if they are in financial distress due to COVID-19. You can call 086 055 5111.
12. ABSA Bank Covid-19 Debt Relief Fund
From 1 April 2020, ABSA’s corporate and business clients will be offered solutions based on their unique requirements and operations.
How much can my business apply for?
For retail clients, the ABSA relief programme incorporates a three-month payment holiday and allows customers to reduce their monthly repayments.
Should you be an ABSA business banking client, this means you will have the opportunity to either continue paying if you are in a position to, to pay reduced instalments by agreement with the bank, or to defer payments for three months. Relevant agreements will be adjusted, by revising the loan period and capitalising interest during the relief period.
Does my business qualify?
To qualify for this relief,
- your account must be in good standing
- you must be financially impacted by the pandemic
Where do I access this fund?
The fund will be accessible from the bank’s COVID-19 site at Absa Covid-19 site.
We will do our best to keep you abreast during this period. Please visit our resources page for regular updates and other relief measures available for business. If you need assistance accessing any of the interventions above, please contact us here.
