With so much inaccurate information circulating on social media, we feel the need to set the record straight and provide you with the correct information relating to all the relief measures that have been set in place.
We have listed below all the current support programs available to businesses:
A. Private Business Support Programs
1. Business Partners (Rupert Family)
The trust formed by The Rupert Family and Remgro Limited, with an initial contribution of R1 billion, will be managed by Business Partners at no charge.
SMEs (small and medium enterprises) and sole proprietors, may apply for R250,000 to R1 million in funding as a loan, which is repayable over a five-year period interest-free or as instalments during the first year, thereafter they will be expected to repay on commercial terms.
The application process started April 2020 via an online portal on the business partners website.
The following criteria must be met:
- Prove that the business is affected by Covid-19, resulting in a decline in revenues
- Tax compliant
- South African owned SME
- Up-to-date financial statements
- Three-months’ bank statements
- Proof of the employment of employees
- Rental statement
- Supporting documents proving how the business is in distress as a result of Covid-19.
2. South Africa Future Trust (SAFT) – Oppenheimer Fund
This scheme is only available to clients of Nedbank, FNB, ABSA and Standard Bank, and applications can be made from the 3rd April 2020. The purpose is to subsidise the employees’ salaries which reduces the cash flow constraints employers are facing during the Covid-19 crisis.
In support of the small, medium and micro enterprises, Jonathan and Nicky Oppenheimer pledged R1 billion.
The South African Future Trust (SAFT) was formed with an initial R1 billion in support. SAFT will transfer funds directly to employees of participating SMME’s via interest-free loans where employees themselves carry no liability.
Repaid loans to the SAFT will be used to support initiatives which focus on creating employment until all funds are disbursed.
For more information please visit https://opp-gen.com/saft/
B. Banking Relief
1. SA Banks Covid-19 Relief
It is really great that most of the banks have stepped up offering some form of debt relief, either in reduced or delayed payments of various forms of debt obligations. To note there is no debt write off, but a much-needed delay in the repayments offering ‘debt-holidays’ for a few months, with the interest calculated on a compounding basis.
This link explains the exact process to follow with each individual bank, who qualifies, the criteria, and the process.
https://www.moneyweb.co.za/news/south-africa/all-the-covid-19-relief-announced-by-sa-banks-so-far/
Before you take advantage of payment holidays, make sure you have ensured that you have checked if you have credit insurance as you will be covered in times such as these.
C. Department of Labour Support
1. UIF Short-Time & Reduced Working Time Options
This claim is done online by the employee and it is subject to the employees’ duration of employment, as with normal UIF claims, it must be submitted with the signed UI-19 form, UI2.8, UI2.1, certified copy of ID or passport, letter of temporary lay-off from the Employer due to COVID-19, and proof of banking.
This benefit will be calculated in terms of the income replacement rate sliding scale of 38% for high earners, and up to 60% for low earners, as provided in the Unemployment Insurance Act, subject to the maximum threshold, which is currently R17,712. The maximum benefit would then be 38% of R17,712 which is R6,730 per month. Low income earners could get less than the minimum wage as there is no minimum amount.
2. ‘COVIDTERS’ – COVID-19 Temporary Employee/Employer Relief
This scheme differs to normal UIF benefits and can’t be claimed at the same time, as reducing working time benefits but can be done as a top-up to any existing salary payments is intended to provide emergency relief to enable employers to pay employees who are temporarily laid off due to Covid-19. The business must be closed, and the claim applies to all employees regardless of the duration of employment. These benefits start from the 1st April 2020 for the whole month, and at present only available for a 3-month period.
The application must be emailed to covid19ters@labour.gov.za. Applicants will then receive an automated reply with details and further instructions, once documents are collated, they are to be scanned and returned to covid19UIFclaims@labour.gov.za. The pay-out can be done directly to the employees or the employer.
The benefits would not be less than the minimum wage. This benefit will be calculated in terms of the income replacement rate sliding scale of 38% for high earners, and up to 60% for low earners, as provided in the Unemployment Insurance Act, subject to the maximum threshold, which is currently R17,712. The maximum benefit would be 38% of R17,712 which is R6,730 per month.
D. SARS Support
1. 20% PAYE Payment deferral
This relief focusses on businesses keeping employees employed and not moving them onto the UIF-TER’s program.
PAYE currently withheld is payable by the 7th (or nearest working day) of the said month. Employers can delay the payment of 20% of this amount at no interest or penalties for 6 months.
The amount withheld may be paid back in six instalments starting in August 2020. The relief is an interest free loan based on the PAYE obligations, not a write-off of PAYE debt.
2. Provisional Tax Reduction and Deferral
Companies with a turnover of under R50 million, and R5 million for individuals, who are tax compliant, can defer the payment of a portion of the first and second provisional tax liability to SARS, without SARS imposing penalties or interest for the late payment of the deferred amount.
First provisional tax periods ending on or after the 1st April 2020, but before the 1st October 2020 and to second provisional tax periods ending on or after the 1st April 2020, but before the 1st April 2021.
The first provisional tax payments falling due within the period the 1st April 2020 to the 30th September 2020 will only be based on 15% (previously 50%) of the estimated total tax liability. The second provisional tax payments falling due within the period 1st April 2020 to the 31st March 2021, will be based on 65% (previously 100%) of the estimated total tax liability. Any shortfall becomes due in the third provisional tax payment and interest would accrue from that date on any underpayment.
3. SARS ETI Program
This program is aimed at youth employment. Employers get a rebate for each employee aged between 18 and 29 years of age and earning between R2,000 and R6,500. This is paid out twice a year. SARS will accelerate the pay-out of the rebate between the 1st April 2020 and the 31st July 2020 to be monthly. If the ETI rebate exceeds the PAYE due, SARS will refund employers. Employers must be tax compliant to qualify for the ETI relief.
The ETI program is to be expanded by the Government for a limited time of four months, starting on the 1st April 2020 until the 31st July 2020. This will increase the maximum amount of ETI claimable during this four-month period for employees eligible under the current ETI Act from R1,000 to R1,500 in the first qualifying 12 months and from R500 to R1,000 in the second 12 qualifying months. It will also allow a monthly ETI claim in the amount of R500 during this four-month period for employees from the ages of 18 to 29 who are no longer eligible for the ETI as the employer has claimed ETI in respect of those employees for 24 months; and those between the ages of 30 to 65 who are not eligible for the ETI due to their age. In addition to any current ETI claims, any tax compliant business who has an employee earning between R2,000 and R6,500 qualifies for a R500 subsidy each month.
E. Government Support
1. SMMERF – SMME Relief Finance Facility
To qualify for this facility, the business must be registered as a small and medium enterprise, 100% owned by South African shareholders, 70% of its employees must be South African citizens, tax compliant, registered with the department of labour for UIF, and must be registered with CIPC as a PTY, CC or a micro enterprise. The company must show that is has been affected financially by COVID-19.
Applications opened on the 2nd April 2020 and can be made on www.smmesa.gov.za. There will be financial assistance available for a six-month period.
The list of required documents can be found on http://www.dsbd.gov.za/wp-content/uploads/2020/03/SMME-Debt-Relief-Scheme-1.pdf.
2. BGRF – Business Growth and Resilience Facility
This fund is for businesses that supply certain products which are essential to manage the pandemic. The BGRF offers bridging finance, stock, working capital, order and equipment finance. To qualify the business must be tax compliant and registered with the department of labour for UIF, registered with CIPC as a PTY or CC, owned by South African shareholders, and 70% of its employees must be South Africans. To apply please visit www.smmesa.gov.za
The criteria to apply can be found at http://www.dsbd.gov.za/wp-content/uploads/2020/03/SMME-Business-Growth-Resilience-Facility.pdf
F. Tourism Industry Support
Tourism Relief Fund
SMME’s in the tourism and hospitality sector who are under stress due to the new travel restrictions, will be able to apply to The Department of Tourism, who has made an additional R200 million available to assist.
The funds will be available for accommodation providers, hospitality and travel related services.
The companies must have a valid tax clearance certificate, be an employer, be registered with CIPC to qualify as a PTY or CC, and have a turnover of under R2.5 million. To make an application please visit the application portal on www.smmesa.gov.za
G. Film Industry Support
NFVF
Beneficiaries who have contracts with the NFVF and who have submitted their milestones in the last two weeks will get priority and receive payments. Those who have not submitted their milestones will be consulted over the next 3 months.
As the Film Festival has been cancelled, the NFVF will ensure that the funds allocated will be utilised in the budget for the next fiscal year which starts on the 1st April 2020. The standard funding process will apply to all new applications including the NFVF Council approvals, starting on the 10th June 2020.
A budget of R500,000 will be distributed to 10 companies who have been commissioned to assist with distressed companies who were forced to cancel production shoots. The NFVF has allocated R5 million as part of the slates program benefitting young emerging producers and will be used as part of the relief program. This relief will only be contained to the slates currently commissioned by the institution.
Assistance from Recro – we are here to help you
At Recro we have dedicated client support staff who are here to assist businesses with any advice and application processes.
They strongly recommend that you make your applications as soon as possible, it is still unclear if the applications are on a first-come, first-served basis.
We are working remotely and available normal working hours to assist you and your business remain compliant and thriving in this current economic climate.
We have a dedicated email address set-up for an COVID-19 related queries – covid-19@recro.co.za
SAICA has compiled this detailed document for further information: SAICA Summary of government assistance 6 04 2020 (2)
