“We will prioritise the lives and livelihoods of our people above all else, and will use all of the measures that are within our power to protect them from the economic consequences of this pandemic” (President Ramaphosa)
The President has announced a variety of initiatives to assist SMMEs (Small, Medium and Micro-Enterprises) that will need assistance in surviving the three week lockdown and economic disruptions flowing from the COVID-19 coronavirus.
This is a developing story – expect ongoing changes!
Many of the announced measures discussed below still need to be enacted and may be different when they are finalized. Expect ongoing changes and keep Googling for ongoing lists of proposed and implemented avenues of business relief. See for example ActsOnline “South Africa’s coronavirus debt relief now live” here.
The Department of Small Business Development (DSBD)
R500 million has been set aside to help SMMEs due to the impact of the coronavirus. The money will be in the form of loans at prime less 5%. Assistance falls into two categories:
- Business Growth/ Resilience Facility. This applies to businesses whose products are aligned to helping to combat the pandemic. Examples are making hand sanitisers, medical protective clothing, medical supplies etc. SMME logistics companies may also apply for funding.Funding will cover bridging finance, asset finance, stock and working capital needs.
- Debt Relief Fund. Companies will need to show how the coronavirus has impacted on their business. The relief focuses on purchase of stock and other operating needs. Funds will be released based on the company’s cash flow requirements.
The starting point is to register on the DSBD’s portal (www.smmesa.gov.za) – the registration entails staff breakdown between males and females, the number of youth employees and racial classification of staff. There is also a section on who owns the business and annual turnover. The business needs to be 100% South African owned and the work force is to be 70% local.
The DSBD is setting up an SMME database which will be used in future interventions.
Once registered follow the application process. How much each business gets is still unclear.
Call the DSBD’s hotline 0860 663 7867 or email info@dsbd.gov.za to check what kind of government support you qualify for.
Department of Trade and Industry
R3 billion assistance has been set aside with a main focus on providing funding to “vulnerable” businesses and to provide financing help to companies involved in the battle to roll back the coronavirus. It’s not that dissimilar to the DSBD’s approach but it serves all business, not just SMMEs. Of the R3 billion, R500 million will be for importing needed medical products and R700 million will be for financing equipment and working capital requirements. Guidelines as to how to apply are forthcoming.
The Solidarity Fund
This has been set up with R150 million from the government (www.solidarityfund.co.za) and it is designed to help stop and detect the virus, look after the people with it, plus help those people who are vulnerable as a result of the coronavirus.
You may wish to donate to the fund or apply for help for struggling staff members.
Private Funds
The Rupert and Oppenheimer families have each pledged R1 billion to help struggling small businesses and employees. It is not clear at date of writing what channel will be used to distribute these funds. (It is also not clear at this stage whether any portion of the Matsepe Foundation’s R1 billion pledge will go to small business relief).
Other relief measures
- Tax compliant companies with turnover of less than R50 million will be able to hold back 20% of their PAYE payments for four months and can delay provisional tax payments for six months.
- Government has mooted Unemployment Insurance Fund benefits of up to R3 500 p.m. for up to three months to qualifying workers from a special R30bn National Disaster Benefit Fund. The Department of Labour’s “Easy Guide for employers on COVID19” here includes a link to “COVID 19 TERS Benefits Easy AID for Employers”. Employees who fall victim to the virus will be paid through the Compensation Fund – details here. Employees earning less than R6 500 a month are to receive R500 per month from SARS via the PAYE system.
- The Competition Act has been amended to allow banks to work together to come up with solutions to help indebted companies and people.
- A R200 million fund has been set up to help SMMEs in the tourism sector.
- The Competition Act has also been relaxed to allow retail tenants to get together and present a unified negotiating position to landlords in the areas of evictions, rental discounts and rental “holidays”.
Expect more initiatives to emerge as we move deeper into the coronavirus crisis. How much these measures will cushion the shock to the economy is unknown. They are, considering how little fiscal space there is, a creative and welcome attempt to help business and people affected by the lockdown and other restrictions. Nevertheless, the economy is seen as being virtually certain to enter a recession.
Remember we are facing desperate times and the nation, led by President Ramaphosa, has shown courage and determination in facing down the coronavirus.
