Learning Centre

SMALL BUSINESS COVID-19 SUPPORT FUND

Both Cyril Ramaphosa and the Minister of Small Business Development, Khumbudzo Ntshavheni, announced the launch of a support fund for SMME’s during the COVID-19 crisis after generous funding has been made available.

Said Ntshavheni: “Government understands that SMMEs will be affected on two levels as businesses, when the economy slows down and as suppliers of products and services during this period. To mitigate the impact during the expected economic slowdown, the department is finalising the SMME support intervention comprising of the Debt Relief Fund and Business Growth or Resilience Facility.”

Although to qualify, businesses are required to prove a direct link between the inability to service the business loan and the COVID-19 outbreak. The grey areas that need to be clarified are:

1. What business qualifies as a SMME.

There does not seem to be a fixed definition, SMME stands for Small, Medium and Micro Enterprise. We are uncertain if the classification is based on turnover or employees but the potential scope for a business to be classified as a medium enterprise is vast. We therefore don’t think there will be many limitations to who qualifies for the SMME grants.

2. How big the fund available is.

Thus far R3 billion has been allocated for support, we are hoping some other benefactors donate to this fund too.

The fund launched on the 24^th March and the link to the fund is as follows:
http://www.smmesa.gov.za/

There seems to be two aspects of the relief:

The Debt Relief Fund – aimed at providing relief on existing debts and repayments, to assist SMMEs during the period of the COVID-19 state of disaster.
Business Growth or Resilience Facility – enables continued participation of SMMEs in supply value-chains, in particular those who manufacture (locally) or supply various products that are in demand, emanating from the current shortages due to COVID-19 pandemic.

“This facility will offer working capital, stock, bridging finance, order finance and equipment finance and the amount required will be based on the funding needs of the business.” the Minister of Small Business Development, Khumbudzo Ntshavheni said.Nedbank and Standard Bank have already said business can apply for relief around debt and debt restructuring, we urge you to investigate this offer if your business has been affected by the COVID-19 disease. Most other banking institutions will follow suit. We advise you chat to your banker about extending or restructuring your credit during this time.

The website was inundated on the 24^th March, but some successful applications did get through so keep trying. If you need any assistance with the application process, applications to the bank, or any business financial concerns around this crisis, please contact Recro to assist.

We strongly advise that you apply as soon as possible, as we are not sure if it’s a first-come, first-served basis of funding.

We recommend keeping a very clear track of expenses incurred relating to this crisis so that your claims can be rapidly processes and you can receive relief sooner. Examples off such expenses are: quantifiable expenses like special software, IT support, hardware, debt collection services, cleaning services etc. and non-quantifiable like your personal planning time, crisis management team meetings/collective time, update conversations with clients, team members, creditors etc. In other words, a schedule of any time and money spent in your business to deal with the current uncertain situation as well as evidence to back these up.

There are a few more relief measures announced that will be available to small businesses. As soon as we have more practical details on these, we will keep you informed.

Kind regards,
Claire