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The COVID-19 pandemic will have – and in some instances already has had – a devastating impact on every industry in South Africa, and the small business sector will probably be one of the hardest hit.
This is a tough time for small business owners and employees. The challenge has further been exacerbated by the commencement of a 21-day national lockdown in South Africa, which has placed strict restrictions on travel and movement. This, in turn, has placed immeasurable pressure on small business operations and revenue.
But small businesses haven’t been left out to dry by banks or the government, with several relief efforts and programmes launched to mitigate the effects of this “economic shutdown”. Whether these resources will be enough to save small businesses from retrenching or shutting down is yet to be seen, but what’s for sure is that they will soften the blow.
Let’s take a look at some of the relief efforts that small business owners should be tapping into in this trying time:
From the government:
On 24 March, the Department of Small Business Development announced that they would be introducing three measures to support SMMEs affected by COVID-19. These include:
1/ The Business Growth and Resilience Facility
According to the department, this is specifically targeted at SMMEs that locally manufacture and supply hygiene and medical products. These include sanitisers, tissue paper and detergents.
“This facility will offer working capital, stock, bridging finance, order finance and equipment finance,” Khumbudzo Ntshavheni, the Minister of Small Business and Development, explained in a statement.
“The funding amount will be based on the funding needs of the actual business.”
- The business must be 100% South African owned.
- 70% of the employees must be South African.
- The entities must be registered and be compliant with SARS (if the business is not compliant, they will be assisted with the compliance process).
2/ The SMME Relief Finance Scheme
The department explains that this facility will give soft-loan funding (a loan given with next-to-no or no interest with extended grace periods) to existing businesses in distress because of COVID-19. It’s further explained that the relief will be given for a period of six months starting from 1 April 2020.
“The term may be extended dependent on their needs,” minister Ntshavheni said.
“Separate and tailor-made facilities are being finalised for the informal sector, spaza shops and the self-employed.”
- Business must be 100% South African owned.
- 70% of the employees must be South African .
- Entities must be registered and be compliant with SARS (if the business is not compliant, they will be assisted with the compliance process).
3/ The Sefa-Debt Restructuring Facility
Finally, this fund is directly targeted to SMMEs that are sefa-funded and have been hit hard by the COVID-19 pandemic. This will work by giving these SMMEs a six-month payment holiday to reduce their ‘installment’ burden of a loan obligation. As is the same with all the other funds, the SMMEs will have to clearly show how they’ve been negatively impacted by the pandemic.
If you want to apply for any of these relief efforts (or for non-financial support) for your business, you can do so on the SMME South Africa platform here.
Here’s some of the things the portal will ask you to share:
- Number of employees
- Employee demographics
- Annual turnover
- Shareholders and current BEE standing
From the banks:
Not only is the government stepping up to support small businesses, but some of the country’s biggest banks are offering their support too. Let’s take a look at what each one has promised:
Standard Bank has launched a measure called the Coronavirus Business Interruption Payment Scheme which gives their SMME clients a three-month payment holiday. The business will have to have been in good standing with the bank and have an annual turnover of under R20 million. This is set to launch on 1 April and will continue until June 30.
“We can see what is going on in our clients’ accounts, and we can see that there are certain pockets of our customers that are starting to take strain just because of social isolation,” Funeka Montjane, Standard Bank CEO of Personal and Business, told Business Day.
While the exact range of Nedbank’s support for SMMEs is not yet clear, the bank’s spokesperson Kedibone Molopyane said that the bank would be offering relief efforts.
“This support could include deferring payments (or part thereof) for a suitable period, extending existing loan periods or extending additional credit to manage short-term cash-flow shortfalls,” Molopyane said in a statement.
“Nedbank understands that we have a responsibility to do all we can to play our part in reducing the impact of COVID-19 on our customers, our economy and our country. [We] have a number of solutions available to assist clients in good standing who are impacted by this pandemic.”
The bank is encouraging small business clients and other clients to contact them on 086 055 5111 or small business clients can also get in touch with their relationship banker.
In a statement, FNB declared that they were committed to helping SMMEs who have been badly affected (financially) by the COVID-19 crisis. While the bank hasn’t been quite clear on what programmes or relief efforts they will put in place yet, they did say that they would be making further announcements soon.
“The bank continues to work with the Banking Association of South Africa, in engaging with the South African Reserve Bank and Government on a variety of solutions aimed at supporting both consumers and businesses through these difficult times,” the bank’s statement said.
“It is the collective responsibility of both the government and the private sector to continue working together to identify immediate and long-term initiatives that will provide relief.”
Absa and Capitec Bank haven’t yet made a clear statement as far as offering relief for their small business clients.